Posted by: yarbel | 2nd Mar, 2016

Yale Law School’s Seminar in Private Law: The Role of Business Elites in Negotiating the End of Apartheid

Post by Sadie Blanchard, Research Fellow Yale Law School

Last week’s session of the Seminar in Private Law at Yale Law School considered the role of business elites in negotiating the end of the apartheid state in South Africa. Michael Young discussed the secret negotiations he convened in England during his tenure at a British mining firm operating in South Africa between the African National Congress in exile and Afrikaner elites. Itumeleng Makgetla presented a paper she is coauthoring with Ian Shapiro that applies game theory to the role of South African business leaders in negotiating the transition to democracy.

Young set the stage by recalling how dramatically international relations in the 1980s were shaped by the Cold War’s iron division of the world. South Africa’s social, economic, political, and security conditions were deteriorating: a state of emergency had been declared; unemployment was rising; and foreign investment was fleeing. Prime Minister P.W. Botha had begun running the country through a security bureaucracy, alienating even members of his own party. Despite the widely recognized instability and injustice of the regime, the United States and the United Kingdom were unwilling to offer diplomatic support to a transition because of the ANC’s communist affiliations within and outside South Africa.  

Those invested in long-term businesses in South Africa—such as the mining sector—were concerned about the situation, but most believed the military could contain it for at least 20 years. Other business leaders advanced a gradualist approach in which business would invest in social infrastructure to improve the lives of the black majority population. Young saw the situation as unsustainable even in the medium term and the only resolution as universal suffrage. He managed to secure an invitation to a meeting in London between ANC President Oliver Tambo and other ANC leaders in exile and leaders of British industry. Through that meeting, he initiated what became a series of secret meetings that took place over the course of several years between ANC leaders and influential members of the Afrikaner community, which controlled the political process in South Africa.

In Young’s assessment, several factors legitimized the negotiation process. First, it worked, in the sense that it brought together people critical to reaching a resolution, and in such a way that they engaged in good faith negotiations. Second, the process itself was able to circumvent the merits of each party’s position and operate on the basis that each side, regardless of whether it was correct, had capacity and therefore had to be engaged. Third, from early in the process, the parties took ownership of the issue. Fourth, it was done secretly, which enabled genuine mutual engagement and compromise without fear of public backlash.

Makgetla and Shapiro’s paper describes a prisoner’s dilemma involving the ANC and the National Party, South Africa’s governing party. The government and white South Africans “expected that giving in to opposition demands would unleash a tidal wave of swart gevaar (‘black danger’) heralding a ‘total onslaught’ of communism,” while the “ANC was stuck with the reality that nonviolent resistance . . . had yielded the creation of the apartheid state . . . , forced removals, violent repression . . . , and execution and imprisonment of many of its leaders. . . The ANC’s dominant strategy was to resist.”

Leaders of large South African businesses decided to work with the ANC in exile rather than siding with the government. In Makgetla and Shapiro’s assessment, the alliance between business and the ANC helped to enable a relatively peaceful transition to democracy even though conditions pointed toward a likely violent transition. Business was uniquely positioned as sufficiently separate from political leaders to serve as honest brokers but sufficiently interested in South Africa’s future that their expression of a desire to secure a peaceful transition was credible to both sides. Other pillars of civil society, such as the church, were not trusted by both sides. Changed geopolitical conditions created space for a negotiated agreement where none existed in the preceding decades. The end of the Cold War and the fall of the Soviet Union reduced the threat of the spread of communism, thus enabling the business community to envision alternative futures for South Africa. Similarly, the ANC’s views about possible futures changed when President Gorbachev explained that his country could no longer support proxy wars around the world. At an early meeting between industry leaders and ANC leaders in exile, business leaders came to realize that ANC leaders were reasonable, rational political leaders who were open to the prospect of market-oriented policies.

Rick Brooks elaborated on the game theory considerations present in the situation. Where parties expect to play multiple rounds of a game, cooperation can become possible because parties can punish one another in later rounds for defecting on agreements made in earlier rounds. Perhaps also, the presence of an honest broker resolves an imperfect information problem between the parties by informing them of the range of possible actions from which they can choose or by credibly conveying each party’s payoffs from various actions. A final consideration is that in repeated games in real life, payoffs are often not fixed. As they change, the optimum decision changes. It is important to explore how such a movement from one equilibrium to another can happen.

Daniel Markovits pointed out the various norms at issue, each with different internal logics: a logic of security, a logic of democratic equality, a logic of racial purity, and a logic of commercial gain. Unlike the first three, the last admits of continuous fulfillment; it is not an all-or-nothing question. He asked whether commercial interests are well-suited to brokering because they can be satisfied by an incremental benefit.  

A student pointed out that unlike in previous sessions of the Seminar, non-neutrality was a source of credibility of South African business elites as mediators here. She wondered, though, about how their non-neutrality pushes the ultimate agreement in a certain direction. The “Mells Park” negotiations convened by Michael Young also stand in distinction from the processes the Seminar has considered previously in that secrecy was presented as necessary to the success of Mells Park because of the dispute’s explosive political nature.

Next week, the Seminar will explore the legitimation of human rights with Sam Moyn of Harvard Law School and Iain Levine of Human Rights Watch. As always, the papers are available here.

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