Published by the MIT News Office at the Massachusetts Institute of Technology, Cambridge, Mass.

Divestment Debate Fills 10-250

SHARP DISAGREEMENT

Divestment Debate Fills 10-250

BY CHARLES H. BALL

NEWS OFFICE

The divestment issue came into sharp focus at MIT last week with a 
debate Wednesday (May 2) between President Paul E. Gray and Lindiwe 
Mabuza, chief Washington representative of the African National 
Congress.

That was followed on Thursday (May 3) with a meeting between members of 
the MIT Corporation's Executive Committee and members and supporters of 
the Coalition Against Apartheid.

On Friday (May 4) the coalition held a rally that started at noon on the 
77 Massachusetts Ave. steps. Later, 50-60 coalition members and others 
at the rally carried through university corridors a large facsimile of 
an envelope containing letters calling on MIT to divest. The "envelope" 
was brought to the offices of President Gray, Dr. David S. Saxon, 
chairman of the MIT Corporation, and Vice President  and Treasurer Glenn 
P. Strehle. Speeches calling for divestment took place in the corridors 
outside the offices.

The debate on Wednesday was sponsored by the Undergraduate Association 
as a colloquium on the topic, "Should MIT Divest?" It drew a capacity 
audience of about 400 personsÑthe majority of them studentsÑto 
Huntington Hall (Rm 10-250).

The speakers were introduced by Manish Bapna, the UA president. They 
spoke in turn and then each asked two questions of the other.  Dr. Gray 
was unable to attend a reception that followed because of a scheduled 
meeting with the Visiting Committee on Linguistics and Philosophy.

While both speakers agreed that apartheid, the systematic repression of 
blacks in South Africa, must endÑDr. Gray termed it an "unsupportable, 
indefensible, unmitigated evil"Ñthey disagreed sharply on whether 
divestment by MIT of stocks of companies with ties to that nation would 
serve that end.

"What is at issue here is not the realities of South Africa, not the 
importance of ending apartheid, not the need for moral actions by 
individuals and institutions," Dr. Gray said, "but the nature of the 
moral imperative and the effectiveness and consequences of the action of 
divestment." He said there was no evidence that divestment had caused 
corporations to cease operations in South Africa, although he said US 
sanctions and boycotts by US consumers had been effective in encouraging 
disinvestment (the withdrawal from South Africa by US companies). 

Ms.  Mabuza countered that economic involvement "fuels apartheid" and 
that "sanctions do work." She added, "We come to you because we are 
convinced that we need to put the final squeezes on apartheid."

Dr. Gray listed what he said were "sound reasons for continuing the 
involvement of responsible US corporations with South Africa:"

ÑUS firms that take their responsibilities seriously bring certain 
benefits to black South Africans, such as jobs, support of housing, 
education, fair wages, empowerment of workers and support of unions.

ÑWhen democracy comes to South Africa, US investment will be desirable.

ÑSome companies provide products essential to the welfare of South 
Africans such as medical supplies and medicines.

ÑTransfer of assets and corporate functions to South African owners is 
not necessarily a good thing.

ÑAn action taken on moral grounds requires moral consistency, such as 
ending all relationships with the affected companies.

Thus, he said, "full consideration of the moral dimension leads me to 
conclude that morality requires continued involvement by responsible US 
corporations, not disengagement."

Ms. Mabuza, in her opening statement, insisted that continued investment 
in companies with business in South Africa was "highly immoral." It 
suggests, she said, that while apartheid is an unfavorable environment 
for blacks in South Africa, "it is a favorable environment for 
companies."

Whatever other arguments were made, she said, the issue ultimately came 
down to "the lives of the people." 

"It's our lives, it's our people," she said. "It's not an academic 
question. . . When people talk about the best way of fighting apartheid 
economically being that of consumer boycott and purchase restrictions 
rather than sanctions, it means the victims of apartheid must be the 
ones who are responsible alone for getting rid of apartheid."

"In other words," she continued, "let the people in the townships 
boycott the goods but don't let the [European and American] companies. . 
. have a responsibility of withdrawing that energy, that sustenance, 
which makes apartheid what it is."

A majority of the audience was sympathetic to Ms. Mabuza's position and 
interrupted her comments several times with applause and shouts of 
approval.

On the question of divestment's effectiveness, Dr. Gray said If MIT were 
to divest, "a lot of folks might feel good for a few weeks and the 
question could be asked a month or so later, what happened, what effect 
did it have? I think if MIT were to be joined by a couple of dozen other 
universities and colleges in that action, it might make a little more 
news but I do believe it would have little effect on the activities of 
American corporations that we're talking about."

"I simply believe divestment is not a useful tool in getting  there [the 
ending of apartheid] and will be of negative impact on  this 
institution."

One consequence of divestment for MIT, he said, would be to thrust the 
Institute into the political arena. This, he said, could invite 
political treatment of MIT's own vital interests, and set a precedent 
for other efforts to use MIT influence on political issues.

Divestment, in addition,  would require the Institute to reconsider its 
other relationships with the affected companies, he said, in such 
matters  as recruiting, sponsorship of research and acceptance of gifts.

"Now some will argue that such relationships need not be terminated or 
otherwise affected. However, use of investment policy to achieve a moral 
purpose requires other actions, it seems to me, if we are to avoid a 
posture or moral selectivity or hypocrisy," he said.

Divestment also would have a negative impact on the MIT endowment, Dr. 
Gray said, by imposing constraints on investment managers. Studies done 
outside MIT indicate that the Institute could expect a penalty of 1.5 to 
3 percentage points on total return from its $800 million stock 
portfolio. If the total return were reduced by 2 percent, this would 
translate into about $16 million per year in foregone return.

MIT currently holds securities of 13 companies with operations in South 
Africa, but does not invest in companies whose principal activity is in 
South Africa. These securities have a value of $84 million, or 5.4 
percent of the total market value of MIT's general investments. None of 
the companies has more than 1.5 percent of either its assets or its 
employees in South Africa, Dr. Gray said, and most have much less than 
that. 

Finally, Dr. Gray said MIT could make its greatest contribution to the 
fight against apartheid through such actions as education and financial 
assistance to South African students studying at MIT, financial 
assistance to black students in South Africa, scholarly exchanges 
between faculty, and research and teaching on matters that will aid 
development in post-apartheid South Africa.	

Ms. Mabuza responded that MIT's potential financial loss through 
divestment was "so small it won't make that much difference for you to 
get out of there. Addressing the audience, she said, "You don't want us 
to pay for your education with our suffering, do you?"

Divestment by MIT would be a "positive token," she said. Shouldn't we 
say that enough is enough?"

One of Dr. Gray's questions to Ms. Mobuza was to ask her to assess the 
impact on black South Africans and the South African government of 
disinvestment by US corporations. He noted that about 100 had left South 
Africa in the past five years, most of them having sold their operations 
to South African entities.

"I'll begin with the last, the South African government," Ms. Mobuza 
said. "That's why they do not want divestment, because it has had an 
effect. It has had an effect economically. It has had an effect 
psychologically. The whites in South Africa are beginning to understand 
that the world is serious [and that] American firms, German firms are 
very jittery about remaining in that area. They have decided to move a 
step away from apartheid. There is no way you can explain the last 
elections in South Africa without acknowledging that to some extent the 
whites in South Africa understand that they cannot have their normal 
experience. . ."	

Ms. Mabuza agreed that divestment could have an adverse effect on 
individual blacks in South Africa as a result of the loss of jobs when 
US companies disengage from South Africa.

"Yes, they lose jobs," she said, "but it is better to have an end to 
this terror than to keep these companies there." Referring to the Boston 
Tea Party and other events leading to the American Revolution, she said 
the colonists also had been "willing to suffer" to free themselves from 
oppression.

"Why should we be treated like perpetual children who don't know what's 
correct for them?" she asked, bringing loud approval from the audience. 

One of the questions Dr. Gray asked of Ms. Mabuza concerned several 
polls that he said have thrown into question the ANC's claim of broad 
support for divestment. At least two polls, he said, "have shown that 
the vast majority of South African blacks. . . take a different  view."

Ms. Mabuza replied that polls could be manipulated to reflect the biases 
of those taking them, such as asking employed blacks, "Which do you 
chooseÑliberation or your job?"  She said this ignores widespread 
unemployment among South African blacks and their desire for "liberation 
in order to secure jobs for everyone in the country."