South Africa:

Feasibility of Imposing Additional Sanctions on Gold

NSIAD-89-232: Published: Sep 25, 1989. Publicly Released: Oct 30, 1989.

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Pursuant to a congressional request, GAO analyzed the feasibility of imposing additional sanctions on South African gold.

GAO found that: (1) U.S. economic sanctions against South Africa included bans on imports of certain products, including those produced by government-owned or -controlled entities, exports of certain products to apartheid-enforcing agencies, new loans and investment, and air transportation between the United States and South Africa; (2) gold accounted for 45 percent of South Africa's export earnings, 13 percent of its gross domestic product, and 10 percent of its government tax revenues; (3) proposed sanctions against South African gold involved banning imports of South African-derived gold, gold products, and gold jewelry, releasing gold from anti-apartheid governments' central bank reserves to depress gold prices, releasing gold from central bank inventories to offset any price increases caused by a reduced supply of gold, and forcing U.S. investors to divest all holdings in South African gold mining shares; (4) enforcement of import bans could be difficult due to the ease of smuggling gold and difficulties in determining gold origins; (5) South Africa has many opportunities to develop new markets; (6) sanctions could result in unintended price increases and increased revenue to South Africa; (7) forced divestment from gold mining shares could affect black miners more than white miners; (8) release of gold could harm other gold-producing nations; and (9) sanctions could still have political, symbolic, and psychological effects.

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