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December 24, 1953
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Approved For Release 2NARS11-r: CIA-RDP80-00809A000500330011-0 ISL ?7.0 aa U.S. Officials Only COMP IDENT IAL CENTRAL INTELLIGENCE AGENCY INFORMATION REPORT COUNTRY Ethlopia/Libya/Sritrea/italian Somaliland/Union of South Africa SUBJECT Conference Reports -- "Africa in the Modern World" PLACE ACQUIRED _ _ (Dv SOURCE) 25X1A DATE ACQUIRED (Dv SOURCE) DATE (oF INFO.) To 1953 SOURCE HIS .0tU.IN, CO.,AloS IftroourtiOft rOrrotlfto rg Dl rog or,fro grriro. strion rarcuarrofto Or rirLl II OCC,.0.$ TOl AND 754. OP T..i G . 1. C.45. ?S ANIINDIS. ITS ITIAAINAI ASIAN OS ASTI, LATIN. OP ITS CONTINTS 12 OS RECEIPT av A55 ..... O? AID ACIISON IA THIS IS UNEVALUATED INFORMATION 25X1X 25X1A DATE DISTR. 3i_t/ Dec !.2: NO. OF PAGES NO. OF ENCLS. SUPP. To REPORT No. iivailable on loan from CIA Library are the following papers presented at a conference on "Africa in the Modern World" at the University of Chicago, 25-29 Nov 53 under the auspicies of the Norman Wait Harris Memorial Foundation in International Relations. These papers may be published, together with other conference papers, in book form at some unopecified future time. 1, 3152Z.4.,,u_itall231.-12.12_AnsLEILasatm Trends and Proarectd, By Robert D. Rtrum. American University. 2. The Chanrinr Eczagala Structure of South Africa. By Leonard H. Samuels, Uninrsity of Witwatersrand, Johannesburg, South Africa./ ?01 18!.6 6P - end - 780.13 5Y 733.1 03 6P(0m) 6P 752.2 5Y 03.2 6P 122.; 6e 831.1 32 7b9 32 s' 32 780 5'1' 781.A 5Y 107.6 5Y, 761. 1 5Y 762.2 5Y U.S. finials Only COL -DENT IAL DISTRIBUTION* J STATE ARMY J NAVY IAIR IFS' This report la for the use within he USA of the Intelligence components of the Departments or Agencies indicated above. It is not to be transmitted overseas without the concurrence of the originating offIce through the Assistant Director of the Office of Collection and Dissemination, CIA. Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT _ .111 _ V; 1;4 _ ?21:. e a .4.)A a A42tteLs I IT Utg La 4,;'" 'Ban than a century ago, the Union of South Africa was a remote, isolated area at the tip of the African Continent. Trading connections with the outside world were tenuous; the interior was difficult of access; and, except for parts of the Cape, the wants of its scattered population were restricted and largely satisfied by a primitive form of subsistence farming. To-day, the economy is in most part highly organized, with a striking ca- pacity for growth. The Union's economic expansion has significant lessons for all under- developed areas, though it has also been affected by the presence of people of different cultures and skin colours. From the outset, the white society, which took root at the Cane during the second half of the seventeenth century, was profoundly influenced by its relations with the aboriginal peoples. First, there were the Bushmen and nottentots, and their numbers were increased by slaves imported to labour for the white colonists. As the whites expanded the frontiers of their cettlement northwards, they also came into contact with the African tribes advancing southwards. Contact between these white and black immigrant communities inevitably resulted in a series of clashes, in part, since both were essentially pastoralists with the same requirements for grazing and water. Each clash between these two vigorous groups perpetu- ated the colonists, dependence on the labour cf the conquered people, because It left large numbers of black labourers at the beck and call of the farmers. Bunning throughout South Africa's economic history is this conflict: the growing dependence on the black man's labour however great the distaste Approved For Release 2001/09/11: CIA-RDP80- Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT for his person or the fear of his competition for land or for jobs. Despite repeated attempts by the various Administrations to keep whites and non-whites apart by military frontiers or, after the middle of the nineteenth century, by -a policy of geographic separation through the creation of Reserves for blacks, economic contact betveen the different groups intensified. Indeed, the process by which the whites acquired the bulk of the land increased the inter-depend- .snce between the conquerors and the dispossessed. To-day, in the Union of South Africa, which covers an area of almost 473,000 square miles, there are about 13,000,000 people, comprising some 2,700,000 whites and 8,800,000 Africans, while there are over 1,100,000 Coloured people, descended from the Bushmen, Hottentots, slaves, Africans and Whites. There are, in addition about 400,000 Indians, first brought to South Africa in 1860 as indentured workers, who constitute the fourth element in this complex multiracial society. Though outnumbered nearly five to one, the whites constitute the elite group in this deep south of the African Continent. Their higher eco- nomic standards reflect, in part, differences in skill and productivity, but are also due to their strong bargaining position and such factors as tradi- tion and colour prejudice. The dominant position of the white group within the political and social structure flows from their control of political and militeay power, superior education and their Western heritage. The story of South Africa has often been told in terms of this formid- able structure to defend a ,White South Africa., Yet, perhaps, the most sig- nificant aspect of the Unions economic development has been the gradual break-down of all those barriers, which have impeded the growing inter-de- pendencp of its inhabitants. Increased co-operation has resulted in higher standards of life for all sections of the population, who have been drawn L_- Approved For Release 2001/09/11: CIA-RDP80-00809A00050033001 Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CORTRIERBIRT into the mouern economy. in ao rar as these higher utanuaras have depended upon increased co-operation and inter-dependence, the different groups are destined to become even more closely integrated, if the economy is to main- tain its present rate of expansion. One of the most potent forces making for these changes has been the high economic and cultural aspirations of the small white settled population. The whites have been able to oatiofy their desire for greater material welfare through their skill, initiative and growing command over the means of produc- tion. In the process, they have attracted the less developed African and Coloured peoples into the ambit of an exchange economy, and have constructed with their aid a modern state closely linked to, and dependent on, the world economy. The diamond and gold discoveries of the 'sixties, 'seventies and 'eighties of the last century wrought an economic revolution in a still large- ly feudal society. They provided wealth on a spectacular scale, produced an immediate expansion of the marl:,:t, quickened the tempo of commercial life, drove up land values, and led to a rapid creation of capital gains. Mbreover, the mineral discoveries led to a substantial influx of capital and immigrants from abroad to the largely inaccessible interior. Here, indeed, was the sur- plus wealth and the technical skills necessary to develop the country's re- sources and span it with a net-work of communications. It is not possible to review more than briefly the economic changes initiated by the mineral discoveries, which were destined to destroy the large- ly static, rural society. The sudden establiohemtn of new, large-scale activi- ties threw a heavy strain on a farming system with its omall surplus production. Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 E Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 L. CPYRGHT The expanded demand for meat and other foodstuffs, together with the pressure of rising land values, required a more settled agriculture or intensive stock raising. Those farmers, driven on to poorer and smaller areas of land, ac- quired mainly through the process of sub-divided inheritance, became increas- ingly incapable of adjusting themselves to the economic development taking place in the rest of the economy. They were bound to fail, eince the farming techniques with which they were familiar were only euited to the primitive . methods of exploitation of large land-owners, dependent on an abundant supply of 'cheap' labour. Thus, there emerged a growing class of rural poor, who tended to join the ranks of those landless whites, the "byovners." They were called "Byowners," because they lived on the land of relatives or friends for whom they worked in one capacity or another, but without any real economic status. These landless whites became at last what they were called - 'poor whites.. Each shock to the agricultural economy disturbed the loose hold of some of these agriculturists on the land, and sent a fresh wave of them into the towns. Agriculture in South Africa has had many shocks, apart from the droughts, pests and other natural disabilities which afflict it. In this century, perhaps, the most serious shocks have been the Anglo-Boer War between 1899-1902, and the collapse of agricultural prices after the boom following WOrld Nhr I and dering the Great Depression. Despite the general growth of agriculture, therefore, farming as a whole hen become progressively lees able to support either a working or dependent population, which was not making an economic contribution to its costs. To-day, less than one-fifth of the white working population is engaged in agriculture. About one-half of the Union's Aorking force in officially estimated an employed In farming, while Ito 'share' ln the national income amounts to leos than one-seventh of the total. Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 F Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT The declining immortance of agriculture as a source of livelihood was doubly important, because of the very Large part it had always played in South .A.friean etoonomic and political life. Thus, it was not strange that the exodus of population from the countryside and the growth of a poor white class should have dominated economic policy, at any rate, until the 'thirties., This prob- lem of rural de-population and white improverishment was not, of course, pecu, liar to South Africa, though it had a number of singular features. In a homogeneous society, individuals tend to rise or fall according to their capacity, and find occupations suited to it. In a society stratified along colour lines, however, this vertical diffusion between classes is inter- rupted. The members of the domillant group, who would ordinarily occupy the lowest stratum of society, are inhibited by the national sentiment from under- taking menial tasks, quite amart from the difficulty of competing for such jobs at the low wages acceptable to their coloured competitors. There were, moreover, limited outlets for such white workers in the more remunerative oc- cupations. From the outset, mining and ancillary activities have been organized on the basis of a small, highly-paid white labour force and a large supply of African labour performing manual work at much lower rates of pay. This pat- tern of wages and employment arose because of the original scarcity of the artisan, trading and professional classes, and has been perpetuated by legal and social conventions in the interests of the white group. Thus, it was not easy to fit the unskilled white workers into this peculiar economic organiza- tion, because of his lack of training and habits of industry. Many became destitute, and created a special and embarrasing problem of poverty that would not have existed in a country with a homogeneous population. To-day, unemployment is insignificant among the white community, largely L.- Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 F Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT buQtann., yr the remarkable expansion of the field of employment, particularly in the manufacturing and service industries Between 1918/19 and 1938/39, the net output of manufacturing expanded by more than three-fold, and has more than trebled again since the outbreak of World War II. Since the and of World Whr I, the number of white workers In factory production has increased more than six-fold. The growth of the manufacturing industry is the product of deep-seated changes in the Union's economy. As real incomes have grown, an increasing pro- portion of disposable incomes has been diverted from food and other necessities to the purchase of services and manufactured products. These changes in con- sumption patterns created the conditione for an expansion of the industrial structure. There can be little doubt, however, that this process of indus- trialization was also greatly accelerated by the Authorities' growing pre-oc- cupation with measures to mitigate the serious problem of urban white unemploy- ment. These measures took the form of a 'civilised labour' policy, which de- liberately encouraged the use of white rather than non-white unskilled labour in certain occupations, and aimed at enlarging the field of white employment in the growing manufacturing industries. Since the 'twenties, the scale of manufacguring activity has been ex- panded by a policy of tariff protection, the establishment the Government of undertakings such as power, iron and steel production and engineering works, and by close connections with important firms in the United Kingdom and else- where. In recent years, the Government has actively encouraged a variety of projects, either through the State-controlled Industrial Development Corpora- tion, or through the establishment of State enterprises such as Sasol (South African Coal, Oil ad Can Corporation). The important role played by the State in encouraging manufacturing Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT is indisputable. Nevertheless, the spectacular gluwth in manufacturing during the past decade in particular could herdly have taken place without the impetus provided by the war and post-war conditions. The dislocation and destruction at the end of the war, and the excessive demands, which have existed since the early 'forties in relation to the existing flow of goods and services, have made practically any production profitable. In this situation, the existing price and marketing controls affecting agricultural products, as well as the operation of import restrictions, have increased the profitability of manu- facturing as compared with activities such as farming and mining. To-day, manufacturing activities employ almost twice the number of workers engaged in gold-miming, while they account for some 24 per cent, of the country's national income compared with about 7 per cent before the war of 1914-18. During the same period, the 'contribution' of gold and other mining activities to the national income has declined from 28 per cent to about 13 per cent at the present time. The conclusion drawn by some is that gold-mining is now of much lees impo,etance compared with its role during previous periods of the Union's economic history. These changes in the South African economy, however, require careful interpretation. Tho 'net product' of a given industry, or the size of its labour force, is not a true index of its role in generating income, nor is it an index of the relative importance of any industry to the economy. The extent to which a single industry, say mining, acts as a prime generator of income cannot be assessed on its net product Aln-4 Thus, the mining industry's activity in- fluences the size of the figures of the ether component classes of the nation- al inceme, such as "Agriculture," "Wholesale and Retail Trade," "Transport" and "Manufacturing." The net products of the Engineering, Metals and Power industries, for example, are largely dependent on the demands of the gold mining industry. Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 F Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 L CPYRGHT ?------2. The inter-dependence of incomo-creating 1,1dustries should thus not be overlooke, while it is important to recognize the still great dependence of manufacturing industry on gold mining both as a customer and as a source of foreign exchange. Though the contribution of manufacturing to the Union's ex- port trade has expanded substantially, its ability to finance its requirements of imported raw mai:erials and other supplies out of its own exchange earnings is still limited. The value of manufactured exports, including semi-processed gold, only amounts to about 18 per cent of the Union's total exports. Thus, manufacturing has still to reach the stage, where it can rely on its own ex- change earnings to finance its activities and their expansion. There is reason to believe that the very rapid growth in manufactur- ing since the outbreak of the war has been, in part, at the expense of the Union's export production, with a consequent slowing-down in the rate of its economic growth. A complementary expansion in manufacturing activity as ex- port incomes increase is an inevitable development. It is however, a differ- ent matter when attempts are made to force the pace of industrialization as a means of relieving unemployment and poverty. This Is a lesson, which is sometimes overlooked, when industrializa- tion is suggested as a policy to improve standards of living in the under- developed regions of the world. An attempt to expand incomes by diverting labour and other resources from the export industries to activities producing for the home market can have the quite contrary result. Economic development in the Union demonstrates the importance of maintaining exports, either in the form of additional manufactured products or in the form of raw materials. A reduction in the scale of activities in which a country enjoys a comparative advantage will result in a fall of real income, unless this loss of income can be made good by using otherwise unemployed resources. Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT t_rAuw n or i rt 1?ATItkriAt, It is an extraordinarily difficult matter to express statistically the immense expansion, which has taken place in the Union's economy since the mineral discoveries. National income statistics, which are only available since 1911, have a number of defects, and are of limited utility when they re- late to long periods of time. Nevertheless, they provide some indications of the trend and magnitude of economic activity. The market value of all goods and services increased annually by about 8.5 per cent during the period 1911-12 to 1919-20, while the average rate of growth amounted to 4.4 per cent per annum in the 'twenties and 8.7 per cent in the 'thirties. Since the outbreak of the war in 19390 the net national income produced expanded at an annual rate of almost 11 per cent. These figures make no allowance for the rise in prices, or for the growth in population. Allow- ance for these factors reveals that the rate of expansion in the 'thirties was dore than double the corresponding rate of increase in the 'twenties, while the rate of growth in the 'twenties, in turn, appeared to be almost double the rate attained during the period 1911-12 to 1918-19.1 This is an astonishing achievement, though this rate of growth has not been maintained, despite the immense expansion during the past decade. In spite of this rapid economic advance during the past 40 years, average incomes of the hulk of the population are still extremely low. A 1The estimates are those of Professor S. II. Frankel. The 'twenties relate to the period 1922-23 to 1928-29; the 'thirties refer to the period 1932-33 to 1938-39. Though not strictly comparable, each of the periods chosen commence a year after a depression or recession reached its lowest point and each period ends with the peak year of the subsequent boom. See "An Analysis of the Growth of the National Income of the Union in the Period of Prosperity before the War" by 3. II. Frankel, assisted by H. Herzfeld, P ? Oft A , June, 19144. .0 ? . 00; ? Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 Pepe 10 rough computation suggests that average real incomes per person in the Union are about one-third or leas of real incomes per head in Australia, the United Kingdom and Canada, and about one-fifth of real incomes in the United States. Such international comparisons have, of course, only a limited validity, but they reveal that the Union of South Africa is still a poor country, when Judged by the standards of her total population. Current statistics of income, however, tend to obscure the real signi- ficance of those changes, which have swept the bulk of the population into the modern economy. There has been a persistent and significant improvement in average incomes per head since the turn of the century. In the case of the white population, the improvement, the improvement has been remarkable. lowing roughly for the share of non-white incomes and for various measures of prosperity, such as passenger motor cars and university students in relation to the white population, the money and real incomes of the whites are, after the United States and Canada, amongst the highest in the world. Incomes of the non-white inhabitants are very much lower than the in- comes of the white population. Yet the significant comparison is, perhaps between the relatively high living standarcle of the African workers drawn A into the orbit of the exchange economy, and the low standards of those still lodged in their primitive subsistence eonomy. Incomes, both in cash and kind, derived from the tribal economy are extremely low. According to a fairly recent investigation, incomes from agriculture and other activities appear to have averaged about 070 a year per family of six in the Keiskamr mahoek district in the Ciskei Reserve. Earlier investigations placed the average Reserve money income at about 040 a year for a fmily of five in the Ciskei.2 In the Keiskannahoel- Prea family incomes in cash and kind, including 2See Report of the Witwatersrand Mine Natives, Wages Commission, U.G. No. 21, 1944, page 12. L. Approved For Release 2001/09/11: CIA-RDP80-00809A000500330011-0 r Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT remittances from those working outside the district in urban areas and else- where, averaged approximately g140 a year.3 In contrast, average earnings of non-white workers in manufacturing activities are about two-and-one-half times an high at the present time, UREALIZeTON Rural poverty and the grwring disparity between incomes received from urban and farming activities have been chiefly responsible for the steady de- population of the countryside. A half a century ago the exodus of the white rural population was a trickle. Since the 'twenties, it has gained in momen- tum as a result of the immense expansion in mining, industrial and other activities. /Airing the past 40 years, the percentage of whites in rural areas has declined from 52 per cent, to about 25 per cent, of the total white popu- lation. This migration of the white inhabitants has been paralleled by the movement of the African, Coloured and Indian peoples into the urban areas, though this process only became oignificant at the end of World War I. In 1921 one-eighth of the African population lived in the cities and towns; the percentage is now one-quarter.4 Today, the total population in the urban areas is about 60 per cent, greater than before the war. 3See D. Hobart Houghton and D. Philcoo "Family Income and Expenditure in a Ciokoi Native Reserve," 1,outh Afrtoan Journal of reonomies, December, 1950, page 423. 4The figures relating to the African population in the urban areas are not a true indication of the extent of permanent urbanization. Many of the Africans enumerated in to towns are not permanent residents, but are migrants, who leave their families behind in the Reserves in order to sup- plement their income by working on the mines or in other urban activities. Pressure on the land in the congested Native Reserves as well as the Africans' expanding range of wants are leading to a more settled urban African popula- tion. This is borne out by the decrease in masculinity rates, which are now 185 males per 100 female in all urban areas. According to several sample surveys, some 4o per cent of the African population in the towns appears to be permanently urbanized. Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 E ittpproved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT At the present time, the white inhabitants account for about 40 per cent of the population in the cities and towns, the Africans for about 41 per cent, the Coloureds for 13 per cent and the Asiatics (Indiana) for some 6 per cent. Thus, the towns are now, in reality, mixed areas with the dif- ferent elements of the population closely interwoven in economic life. In manufacturing activities, which are mostly located in the urban areas, Afri- can and force. played. other Coloured workers account for about two-thirds of the labour /n mining, Africans constitute about 89 per cent of the workers em - This dependence of urban activities on non-white labour is also a characteristic feature of the rural economy. The rural African population outside the Native 'Reserves is about four times as great as the whites in the rural areas, and provides over 90 per cent of the workers in farming. About two-fifths of the African population still live in the Native Reserves, and constitute the only compact bloc of one racial group in the Union. The separation of this group from the rest of the South African economy, however, is more apparent than real, since the Reserves are closely integrated with the labour market. At any time, as many as one-third to one half of the ablebodied population may be at work outside the Reserves. Compe- tent investigators') have repeatedly streesod the disastrous consequences of this continuous exodus of adult males from the Reserves on tribal economies and family life. This migrant labour system is a product of ccmplex factors. It reflects, in part, the insecure position of the African in cities and towns, the lack f accommodation for his family, as well an the limited opportunities for his ( Itural and social advancement. For many Africans a plot of ground in the Reserves is a safeguard against loss of employment and, therefore, their right to remain in the urban arena. page 17. lleport of the Native Laws Commission, 1946-48. U.G. No. 28, 1948, pproved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT FPflo J5 Large-scale migration and urbanization always give rise to difficult social and economic problems. There is the Aced to provide housing, food and the other requirements of a rapidly expanding urban population as well as the creation of conditions to ease the transition to urban life, In South Africa these problems have been aggravated by colour and cultural differences, and by the reluctance of the Central Government and Local Authorities to accept the social processes taking place. Thus, the African men and women, who have been detached from their old pattern of social relationships, have largely been left to their own devices to make those complicated adjustments in an unfamiliar urban society in which their opportunities to become productive members are restricted. In these circumstances, their requirements for ade- quate housing and other needs remain unsatisfied, and, indeed, appear to be beyond the existing capacity of the economy. Their solution requires an Jur- mense expansion in national production throu8h more effective use of the Un- ionTs working population, as well as greatly increased contributions by the non-white peoples to their economic and social betterment. (2?VnLF.7 To 7VANflToN. The growing incorporation of all sections of the population in the economy has been accompanied by a steady improvement in their economic posi- tion. On the basin of those trends, it is tempting to forecast that average Incomes per head will expand continuously, - except for temporary sot-backs - owing to improvements in techniques an the developing Industrial society ac- quires more knowledge and enjoys the economies of more effective methods of co-operation. Yet, there is nothing automatic about the growth of a country's national income. It depends on the natural resources available, the literacy skill and well-being of the population, the effectiveness with which the so Approved For Release 2001/09/11: CIA-RDP8 Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT ciety uses its factor endowment, and its ability to adapt itself to the chang- ing circumstances which improved cooperation implies. In the Union, the expansionary process is taking place within a frame- work of custom and legislation, which seeks to confine the use made of African and other Coloured labour. Since the early years of this century, the organi- zation of labour on the gold mines han been dominated by a legal colour bar,6 while restrictions also operate in such 'sheltered, trades as printing and building, and in the engineering and other industries. The industrial colour bar operates largely through trade union pressures, and it has prevented nov- whites, particularly Africans, from being apprenticed and gaining access to the skilled trades. The opposition of skilled artisans to the entry of competitors into their occupations. Is not confined to south Africa. In the Union, however, the fear of lowered standards because of the competition of cheap labour is inten- sified by colour distinctions. The result of this stratification cf the labour force along colour lines has been to create an economic society composed of non-competing groups. In this society of privilege and caste, the great bulk of African workers is largely confined to unskilled tasku, with limited op- portunities to promote themselves along the rungs of the economic ladder. As a result, wide disparities exist between the incomes of the different colour uoups. In mining, where the pattern took root because of the original scar- city of technical and other skills, this disparity is most marked. Non-white 6In terms of the Mince and works Act, the Government is authorized to make regulations to provide for the issue of Certificates of Competence in mining, or works where electrical rower is used, and to limit the issue of certificates to white or Coloured persons. The only other legal colour bar operates through the Native Building Workerot Act, which wan enacted in 1951. This legislation makes provision for he training and employment of Africans in the building of houses for Africans, and for the proclamation of areas in which Africans may rot be employed in the erection and maintenance of build- ings for the use of norr*Africans. Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT workern, who out-number the white workers by about eight to one, receive about half the income of the white miners. This peculair economic organization must not be regarded as entirely rigid. The npeeding-up of industrialization and the scarcity of workers dur- ing the war and postwar years have made considerable breaches in the system, Indeed: the very growth of manufacturing activities has tended to dissolve the complex of the colour bar by opening up an expanding range of work for semi-skilled operatives. To-day, work, which is classed as 'semi-skilled,' appears to be distributed in more or lean equal proportions between whites, Africans and other Coloured workers, According to investigations of the Wage Board, 35 per cent of semiskilled workers are Africans, 33 per cent whites, and Asiatics and Coloureds combined represent 32 per cent,7 On the other hand, about 84 per cent of the skilled workers in the same trades and industries were whites. The penetration of non-white workers into the MOTO skilled occupations has beenigreatly affected by historical circumstances. In older trades, gov- , erned bycraft traditions, and on the mince, trade union pressure reinforced by law has retarded the advance of' non-white workers. Despite these barriers, there has. been a oubetantial modification of the raceal composition of the la- bour force. In the metal and eneineering induotriea, employing over one-quar- ter of these engaged in private manufacturing induotry, more than 20 per cent of the labour force consists of seri-skilled, non-white operatives. In the newer induetries, such as clothing, furniture, leather and light steel manu- facturing; the emuloyment of African and Colouree workers ha e proceeded apace 7These statistics are based on investigations between 1937-1950 of sections Of the manufacturing industry, although other important groups such as the distributive, catering trades and motor industry were also included. See Report of the Industrial Legielation Commission, U.G. 62 - 1951, pages 22-28. Approved For Release 2001/09/11: CIA-RDP80-00809A000500330011-0 CPYRG HT Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 .16 in an increasing range of occupations. In the clothing industry, for example, the percentage of white workers (mainly females) has declined from 61 per cent to 29 per cent of the total labour force during the past 15 years. Given the continued growth of manufacturing activities, it is inevitable that non-white workers will increasingly undertake not only the send-skilled work, but also a growing proportion of the skilled tasks. The future rate of growth of the different sections of the population, as well as the growing tendency for white workers to myve into the distributive and commercial trades is likely to hasten these developments. The movement of Asiatics, Coloureds, and, to an increasing extent, African workers to the more skilled occupations is bringing about significant reductions in the disparity between the wages of workers exercising different classes of skill. The wage of the unskilled labourer (mainly non-white) on the Railways, for example, now constitutes about 18 per cent of the wage paid to the skilled worker compared with about 7 per cent before the war. In the clothing industry, where the gap between skilled and unskilled wage rates has always been smaller, the percentage has grown from 33 to 39 per cent during the same period. Indeed, there is reason to believe that during the past decade the gap between the real earnings of white and non-white work- ers has narrowed even more than the gap between their cash wages. In general, remuneration in kind constitutes a greater proportion of the cotal earnings of non-whites than of whites; and this factor weighs heavily in favour of non-white workers during periods of rapidly rising prices. There can ba little doubt of the constructive and liberalizing in- fluence of the expanding manufacturing and service industries on South Africa,s economic life. Yet, the capacity of these industries for generating change within the existing institutional framework is limited. Throughout the war Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT Jr* 17 um) post-war years, the dependence of the growing manufacturing industry on the exchange earnings of the export industries has been masked, in particular, by the immense inflow of funds from abroad, while the war and post-war infla- tion have provided exceptional opportunities of expansion. These conditions are now changing. In the process, they are bringing into sharp focus the basic contradictions between economic expansion and the survival of those legal and conventional restrictions, which prevent the full utilization of the efforts of the working force. Despite the great economic advance which has teken place, the national output relative to the total pop- ulation remains distressingly low. The low volume of production, in turn, restricts the growth of the market and prevents changes in the industrial structure from propagating themselves in a cumulative fashion. Thus, the Union is denying itself the full benefits of those forces of growth, which are the real dynamic factors in an advancing economy. It is significant that the manufacturing industry after more than a quarter of a century of protection ia still unable to compete effectively in world markets. There have, undoubtedly, been substantial modifications of the peculiar labour structure, which restrains the growth of manufacturing and prevents progress taking place in a co-ordinated fashion throughout the economy. Never - the less, far too many barriers still circumscribe the productive powers of the bulk of the workers, and stunt ambition. Thus, their opportunities of acquiring and exercising skill remain limited, and, consequently impede the development of those faculties, habits of industry, and discipline required In an urban society. In addition, a complex structure of controls restricts the freedom of movement of African workers into the urban arean and their right to acquire property in these areas. Underlying this policy is the as- sumption that the African is a temporary dweller in the towns, and that his peimanent home iJ in the Native Reserves. Approved For Release 2001/09/11: CIA-RDP80-0080 CPYRGHT Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 Prt,7^ 1A. As a result of restricted social and economic opportunities, the African worker, has little incentive to improve his efficiency or to remain in a Thus, productivity remains low and labour turnover high.8 High labonr turr:Dvor combined with the inefficient system of migrant labour, on which the ;%Ines, the Natal sugar plantations, as well as certain farming areas are still based, prevents the development of shills and specialized abilities. The existence of a large, undifferentiated mass of unskilled and illiterate workers leads them to be substituted for less efficient methods, and this severly restricts the scope for mechanization. Thus, is perpetuated a vicious circle of low efficiency, low earning and high labour turnover. An economy condemned to operate in this manner below optimum capacity cannot .easily maintain an uninterrupted rate of economic growth. Indeed, there are unmistakable signs of a slowing-down in the pace of economic ex- pansion, despite the immense constructional, mining, manufacturing and trans- portation activities during the post-war years. During the period 1947-51, the average annual increase in 'real, income (that is, at 1958 prices) per head of population amounted to about 5 per cent, which represents an extremely rapid rate of growth. Nevertheless, the annual rate of growth of the economy during this period was less than the rate of expansion achieved during the 'thirties. Conclusions drawn from simple comparisions of rates of growth during periods, which are not strictly comparable, require careful interpretation. During the period 1933-39, the Union's economy expanded at a phenomenal rate, largely owing to the rine in the price of gold in terms of Sterling and Doi - 8A detailed analysis of the employment histories of 251 firms showed that one half of the jobs taken by Africans lasted less than 6 months, three- quarter leso than 1 year and 90 per cent less than 2 years. :Ilee Native Urban Employment, 1956-44, Department of Commerce, Witwatersrand University. L-- Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 Approved For Release 2001/09/11 : CIA-ROP80-00809A000500330011-0 F CPYRGHT Pre 10 lam, with a consequent improvement in the real value of South Africa's ex- 1 1 ports (including gold) in terms of imports. On the other hand, a complex set of factors helped to restrain the expansion in outPut during the period 1947-51. there can be no doubt, for example, that the linsign1ficant increase or even decline during this period in the output of gold, wool and hides and skins, whiCh still account for about half the Union's export income, has been a vital factor in the declining rate of economic growthin the Union. This decline in 'export production reflects the diversion of labour and other rem sources to 'those activities, notably manufacturing, which have benefitted most from ,ie inflationary growth of money incomes and Prices. At the same time, the real value of South African exports in terms of imports has shown a steady tendency to decline, largely because of the dirdnishJng quantity of goods obtained for each ounce of gold.9 Whatever the precise explanation, the signs of strain in the Union's economy are evident in significant aspects of its economic life. Though the value of farming production is now more than three times as great as in 1938- 1 39, the output of agricultural and pastoral products is little more than one- third higherthan before the war. The failure of farming output to respond to rising inComes and prices has produced a precarious balance between exist- 1 Ing supplies And inflated money demands. As a result, there have been repeat- ed shortages of wheat, dairy produce and other products during the post-war uears. The incapacity of key industries, again, such as transportation, power 1 and coal to cape with a.xowing demands has undermined the efficient operation of the economy. In mining, the strain is apparent in the steady rise in gold 9Th 1949 a unit of exports (including gold) bought only 85 per cent of the imports it bought pre-war. To some extent this position was adjusted by the devaluation of currencies in September 1949, and bythe sharp rise in commodity prices until the early part of /951. Sec "The Sterling Area" pre- pared by Economic Co-operation Administration (Special Minion to the United Kingdom), pp. 247 .rt. ripn, ApprOved For Release 2001/09/11: CIA-RDP80100809A000500330011-0 CPYRGHT Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 Prr7o 20_ mining costs, which is fundamentally due to the fairly rigid racial composi- tion of its working force. This has weakened its ability to retain its com- plement of workers in competition with the manufacturing and tertiary activi- ties. Today, the mining industry has to draw more than 60 per cent of its workers from outside the Union's borders. The inability of the Union's major branches of activity to expand out- put sufficiently has severely strained the economy's capacity to provide hous- ing, food, education and other amenities of a rapidly growing urban population. Its flagging ability to undertake these economic tasks is evident in the rapid growth of money incomes and prices unaccompanied by a commensurate expansion In output. Since the outbreak of war, aggregate money incomes have expanded rapidly, but the real value of production has only grown at about half the rate. The result has been unsatiefied lemands, economic waste of resources, and social distress, which has been accentuated by the prevailing distribution of incomes. wvita or Turyi7r7.7? In leas than three-quarters of a century, the white inhabitants of the Union have fashioned with the co-operant efforts of the African and Col- oured peoples the most modern economy in Africa south of the Sahara. In the process, average incomes of the white group have risen to levels found in ad- vanced economies, while the living standards of the non-white groups drawn into the orbit of the modern exchange economy are much above the standards of those still engaged in subsistence production. The drive behind these lnr sense economic advances has come from the economically and culturally more highly developed white inhabitants of the country. The problem of the future is to hasten the pace of development, and bring about an all-round improvement in living standards, while reducing gross L_- Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 F Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT disparities in wealth and income. Without a substantial increase in the vol- ume of production, it will by difficult to raise significantly the consumption standards of the mass of the population. This will require an economy in which full opportunities exist for developing the skills and capacities of its members. Failure to develop new social and economic structures to replace the disintegrating tribal societies will leave the indigeneoum people uproot- ed, and incapable of integrating themselves into meaningful social and eco- nomic relations in the new industrial society. The social and political dang- ers of precipitating men and women into unfamiliar economic societies in which they are not fully received have become increasingly obvious. This is not a task which can be accomplished by the wave of a magic wand. It requires patient experimentation with new forms of economic and social organization, and the creation of devices for omoothing the transition of those ill-adapted to cope with economic change. Throughout the Union's modern history, the need to make those funda- mental changes required by an expanding economy has been obscured by a series of economic windfalls in the past. To-day, there is again the danger that the Immense increase in incomes in prospect from the new gold-mining developmentn in the Orange Free State, the Far West Rand and the Klerksdorp areas, as well an the exploitation of the Union's uranium resources, will once more reduce the urgency of those adjustments. Yet, these very developments are demonstrat- ing in a vivid fashion the economy's increasing inability to cope with ito growing economic tasks. Indeed, the present acute shortage of labour in gold mining at current wage rates is not merely curtailing the lives of many of the existing gold producers, but s]owing-down the ratn of development in the new gold-fields. Thus, the beneficial flow of additional gold and uranium exports, on which such great store in being placed to buoy up the economy in the immedi- ate future, is likely to be delayed. Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT The white community is evieently facing a choice of alternative poli- cies: the progressive relaxation of restrictions inhibiting the growth of labour productivity or the perpetuation of existing legal and institutional barriers to development, with their depressing effects on consumption stand- ards as well as the relationship between the different racial grouno. It will not be an easy decision for the whites to forego their monopolistic position in the South African society, and expose themselves to the continuous effort and the incessant vigilance necessary in the interests of efficiency and social justice. The white inhabitants are in this respect not very different from peo- ple everywhere, who attempt to maintain their income standards through re- strictive practices. They are besides filled with apprehensions and doubts, which area product partly of their frontier history and partly of their human fraility. However ill-founded, their fears are facts of deep psychological and historical importance. The white man is unealy as he observes the Africans' educational progress, their rine in economic and social standards, their at- tempt to strengthen their bargaining position, and the growth of African na- tionalism. He fears the growth of Native political rights, and the possibili- ty that some day numbers will predominate in the Government of South Africa. Chiefly, he fears that present development will ultimately lead to social mixtures, to race mixture, to the destruction of ,white South Africa.' Fear has a cramping influence cm men's minds. Yet, economic experi- ence is a hard task ranter, and its lessons cannot be easily ignored. Con- tinued resistance to full co-operation with the African end Coloured people will inevitably lower the Western standards of life hloved in the Union: the African population, after all, constitutes a most important part of the resources on the utilization of which depends the economic prosperity of the Approved For Release 2001/09/11: CIA-RDP80-00809A00050033001 E .CPYRGHT Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 Prir.r 2 3. whole society. If, th2ough the application of restrictions, economic growth is brought to a halt, non-white competition will almoot certainly grow progres- sively keener, and restrictions will become at the same time more necessary and more difficult to impose. A surer basis for dealing with the Union's complex social and economic problems is through a policy of expansion. If economic development can be pushed on more rapidly, the demand for white, African and Coloured labour will increase, and the field of competition will be narrowed. It is, in any case, in an advancing and expanding phase of industrial activity that those quali- ties which distinguish the white inhabitants will be in greatest demand. Thus a policy of justice and wisdom can be made to coincide with economic interest. L. E. Samuels Department of Economics and Economic Eistory, University of the Witwatersrand, Johannesburg Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 E Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT 737. Fnlwr-R TTAL7:,T7 c:" rc'; PT-T) 7 rYTTA; T'7177 ATT 7tbert D. -Relm Amcrican Univer3ity Washington, D. C. Probably nothing since the Italian occupation ban affected the course of politica]. events in the former Italian Colonies and Ethiopia no profoundly an the decisions of the LriT General Assembly in 1949 and 1950 with rcapect to the disposition of Libya, rritrea, and Somaliland. An a moult, Libya achieved independence in 1951; 'Eritrea, in 1952, became an autoromous unit federated with Ethiopia under the sovereignty of the Ethiopian Crown; and Somaliland will become independcnt in 1960. The General Assembly assumed this respcnsibility in accordance with the Italian Peace Treaty of 1947 after the Council of Foreign Ministers (France, the UK, the ,J0, and the U0SP) bad failed to agree on this question within a year after the peace Trcaty cnmc into effect. The task of finding a formula acceptable to a two-thirds majority of the Assmbly proved exccedinly dif- ficult and was accomplished only by corTromincs some of which, however in- evitable, may not in the long run prove to be the most suitable for the parti- cular area affected. The rclo of the United Nations has not been limited simply to reaching these broader decisions but hes aloe included Gllid=c() during the transitional periods and a continuing interest through technical assistance in the social and economic advancement cf these territorios. 171 Commissioners in Libya and in Fritrea aided the inhabitants in drafting their constitutions and in Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 E Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT preparing themselves in other respects for independence or L,elf-government; and a NN Advisory Council is assisting the Italian administering authorities In Somaliland throughout the period of the trusteeship. A UN Tribunal in Libya and Eritrea is authorized to decide questions relating to Italian property. The Specialized Agencies of the United Nations (e.g., WHO, FAO, and UNFSCO) have rendered valuable services to Libya and Somaliland through the UN's Expanded Program of Technical Assistance. Libya i3 now receiving more aid per capita from the UN than any other country. All these territories face the common challenge, so familiar elne- where in Africa, of developing backward economies, raising low standards of living, and providing increased facilities for education, and health. In addition, all are seeking to prepare their inhabitants for more effective par- ticip;Ition in government and to strengthen their sense of national solidarity. It is to these problems that we shall now turn as we examine separately the trends and prospects in Libya, Somaliland, and Ethiopia-Eritrea. LFRYA The establishment of the United Kingdom of Libya on December 24, 1951, marked the end of centurica of foreign occupation and control and the birth of a constitutional monarchy federal in nature and faced with innumerable problems of policy and administration. Four cf these problems in particular pone serious and basic que3tion:7 for the West because of Libya's strategic position in Northeastern Afeica. Firot, hew can a state with obviously limit- ed economic resources and tecl,nical skills develop a viable economy? Second, how can a strong sense of national unity be generated to overcome separatist tendencies latent in the hietory and diverse characteristics of the three component provincee--Tripolitanin, Cyrenalca, and Fezzan? Third, hew can a Western-type constitution and a modern governmental bureaucracy best be adapted Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 3 to the politica] dynamics and social and economic inetitutions of this Arab otate? Fourth, how can a foreign policy be formulated which will permit Libya to remain on good terms simultaneously with the Great Powers of the West and with its sister Arab states, some of whom see "imperialist" motives in Western policies toward Libya? C ; +r.a Libya is a poor country, almost totally lacking in valuable Islovamlineral resources or fuel; its precarious ? agricultural and pastoral economy in subject to inadequate rainfall, often resulting in drought, and to damage of crone from searing desert winds, flash floods, and Pests, Coastal fishing and simple manufacturing supplement the fluctuating returns from agriculture. Nevertheless, based on a UN esti- mate, economic benefits equal to mere than half of Libya's national income are derived from foreign expenditures relating to military facilities and the contributions of forting governments to meet budget deficits and further ecc- nomdc development. Without this external assistance, it is clear that Libya today could maintain neither its present standards of living (however low); nor the aver- age annual. cash income of its people (estimated at only about *35 per capita); not Ito present level of imports (most of which consist of essential consumer goods such as food and clothing and only half of which it can pay for through extorts); nor its present low level of government services. The country in- curs a budget deficit of 35 pr cent, which is balanced only through the di- rect contributions of France and particularly of the Many years of concentrated effort to overcome its economic and tech- nical deficiencies lie ahead if Libya is gradually to dispense with the foreign props which now support its economy. A long-term program for improvements in such fields as education, agriculture, health, and development of natural re - Approved For Release 2001/09/11: CIA-RDP80-00809 E CPYRGHT Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 IL sources is supported by technical assistance from the 113 (amounting to $2.8 million in tho past two years) and the UN (about 1.2.5 million for the same period). In addition, with the financial help of the UK, Prance, and Libya has established a. Development and Otabilization Agency to execute public canital improvements and mitigate the effects of drought and a Finance Corpor- ation to provide long-term low interest loans for agricultural, industrial, and commercial projects. In June of this year the Libyan Government submitted a memorandum to the UN Economic and Zocial Council on the additional technical and financial assistance required to meet its urgent development needs. A Five Year Capital Development Program was outlined calling for the expenditure of almost $18,000,000 in addition to the maintenance of a drought relief fund of $2,800,000. Much of the needed aid should become available as the result of a financial agreement with the UK signed in July along with a treaty of friend- ship and alliance. Under its terns, Libylwill receive annually for the next five years $2,800,000 for economic development and about $7,700,000 for bud- getary purposes. The EDCOOC proposed in August that the General Assembly in- vite all governments in a position to do no to provide financial and technical aid to Libya, and recommend that the UN and its specialized agencies give due consideration to Libya's specific development needs, if and when further means become available for assisting underdeveloped areas. Ehtional unity. 111th the establ.lchment of a Libyan state, there were those who feared -..hat the centrifugal forces of regional separatism would prevent the development of strong national unity. They pointed, among other things, to: (1) the wide differences in population among Tripolitania's 800,000 inhabitants, Cyrenalca'n 7,00,000, and the 50,000 of Fezzes, and the determination of the two lut rareas to avoid interference in their own af- Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 F Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT 5 fairs by Tripolitania, (2) the great stretches of desert seizrating these three"islands" and the resulting difficulties of rapid or extensive inter- communication, and (3) the differences in outlook arising from separate local histories, degree of contact with foreigners, and structures of society. Cy- renaica contains the most homogeneous, closely-knit tribal nomadic and semi- nomadic peoples; Trinolitania, a population more Westernized, detribalized, and less ethnically or politically cohesive; and Fezzan, largely sedentary groups of politically untutored oasis dwellers. The period of less than two years since Libyan independence is indeed too short to permit fair judgment on the future prospects for national unity, but it is well to bear in mind some of the chief elements which are working to overcome this problem with even chances of success. Aside from the unifying effects of language, religion, and culture they include: (1) the central position of the King, Idris I, as a symbol of the united allegiance of all marts of Libya and as a force for emphasizing the overriding importance of national over provincial interacts; (2) the federal nature of thp constitu- tion, which while allaying the p.:.ovinces. fears of being dominated by one another, nevertheless przvides the framework for a strong central government in control of the major sources of revenue; and (3) the sense of rational con- sciousness derived not only from sheer existence as an independent state but also from the slowly growing realization of Libya's citizens?especially in Parliament and in the urban centers--that they share common domestic and forelmn problems. Adantetien tr, WPn Tretitutiene. Given the political and social patterns which have long characterized Libyan society, it would be surprising if custom and usage did net result in special adaptation of the Western form of responsible government provided in the Constitution to the peculiarities of Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT the Libyan environment. Thus, political power is likely to remain for some time in the hands of a few prominent families and traditional leaders sup- plemented by a small but growing educated urban elite. Submission of the individual to the group and acceptance of decisions made by traditional lead- ers with higher social status have long been the rule. To most Libyans?inex- perienced in self-government beyond the tribe or village and accustomed to associating central and regional government vith foreign domination --loyally to the state and direct participation in government are still innovations. While these attitudes are changing, especially in the urban centers and coastal Tripolitania, they remain significant limitations to any rapid or drastic changes in the traditional social system. The Libyan Constitution affords considerable latitude in this respect for a gradual transformation toward more modern practice. The framework for responsible government in the western sense is clearly provided through direct responsibility of the Council of Ministers to a popularly elected lower house, exemption of the King from all responsibility, and the required countersigna- ture of his ministers to all his acts of state. Despite these limitations on the King, the Constitution enables him to take control if an emergency so de- mands. Thus, he may exercise a sucpensive veto on legislation, dissolve the lower house or adjourn both houses of Parliament, and today, when legislators tend to follow his lead, he may appoint and rerzve his ministers virtually as he pleases. In the past two years national stability has been fostered by the able leadership of ?rime Minister Mahmud Muntasser, but in trying to reconcile his responsibility to both King and Parliament, he has occasionally been placed in a difficult and ineffective position. His posnible resignation in the near future because of limes.wculd leave few other Libyans with known corr Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT parable qualifications to succeed him. A similar uncertainty surrounds the question of the royal succession, which the Constitution leaves for determina- tion by the preaent King, a man without issue and frail in health. Earelmn Policy Libya deoires the friendship both of the Aral, states and of the Great Powers of the West; yet so long as strained relations exist between certain members of both groups, Libya's middle position could be mis- understood by either side. On the other hand, Libya might serve as a bridge in bringing the two closer together. Libya is tied to the Arab world not only by religion, culture, and a similar history of recent foreign domination but also by membership in the Arab League. At the same time, by permitting the UT:, the US, and France to maintain military facilities on Libyan soil and by recently concluding a treaty of friendship and alliance with the UK, the Libyan Government has shown its readiness to be associated closely with the Western powers. This treaty specifically stipulated that nothing therein is to preju- dice Libya's obligations under the Covenant of the Arab League and thus places Libya in a position similar to that of Iraq and Jordan in being linked both to the Arab League and to the UK by a treaty of alliance. SOMALTIA1'71) Many of the problems faced by Libya in mastering the art of self- government and establishing its economy en a firm and solvent basis are pre- sent in even more serious form in the Trust Territory of Somaliland under Italian Administration. The handicaps to be overcome before December 2, 1960, when, in accordance with the decision of the UN General Assembly, Somaliland is to became independent, are truly formidable if independence is not to be premature. The difficulties, both human and physical, present a challenge which can be met only by time, persistent application, adequate financial resources, Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT 8 and human ingenuity. Sonaliland's inhabitants (1,275,CCO) aro predominantly pastoral nomads eking out a precarious existence in a semitnrren lend, il- literate, untrained in modern skills, and unprepared to exercise the modern institutional techniques of national self-government. The Italian administering authority, uuder general gull:Inc:: of the UN Trusteeship Council, is endeavoring to raise the standards of education and health, organize representative and democratic institutions, and increase the productivity needed to approach economic self-sufficiency. Educational and technical training has made a good begininGhandicapped as it is by nomadism, the necessity of using foreign languages in instruction, shortage of teachers and funds, and the pressure of time. A representative territorial assembly has been established and on lower levels, residency and municipal councils. These bodies are advisory at the moment, but as they gain greater knowledge of parliamentary in:ocedure and appreciation of the need for considering public problems on a broader basis than the traditional kinship group or tribe, they will be granted fuller legislative authority. Members of the younger, educated, urban Somali elite have sought with some success to break down tribalism through emphasis on modern education and political organization (notably the Somali Youth Longue). Their effectiveness has been limited, however, not only by the sheer magnitude of the nroblr2m but also by their difficulties in bring- ing themselves to cooperate wit tce Italian authorities, whose return they had bitterly opposed. Somaliland faces stagz.ering problems in achieving economic independence, given its meager natural resources, its perennial budget deficits (amounting to roughly one-half of expenditures) and its adverse balance of trade. Its exports (chiefly bananas, cotton, and hiects ana skins) pay for only about 40 per cent of its imrorts. Short of promising discoveries of oil, not yet ac Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT hicved but being sought, or of some other valuable resource, Somaliland will find itself heavily dependent on external financial and technical aid after independence. There are possibilities, however, for improvements which could reduce this need. S.,:udies (some of them undertaken by the UN and its Special- ized Agencies), plans, and programs are already under way to expand the small agricultural potential, coastal fishing, and the processing of raw materials. FTTTOPIPL-FFLT197A Ethiopiwspostwaryearshavebeenmarkedbytgreat progress in moderni- zation, federation and increasingly active participation in world affairs. yodern)zatipn. For centuries Ethiopia was laolated from the rest of the civilized world primarily because of geographic inaccessability--the rugged interior of the country, fringed by desert, the absence of adequate all-weather reads, and the lack of a direct outlet to the Bea. Its peoples, mostly peasants and herdsmen of many strains and tongues, have livdin a tribal and semifeudal society strongly resistant to innovation and, not without reason, suspicious of outsiders. Long ruled by a "King of Kings," whose theoretically absolute power fluctuated in strength from one century to another with the tides of internal warfare, Ethiopia has made its greatest strides toward adoption of Western institutions during the past quarter century tinder its present Emper- or, Haile Selasai I. Sc rapid have been the changes :that under a less wise ruler, the strain of adjustment would have taxed sorely the loyalty of the traditional, conservative lesser ruling class. Economically the country re- mains relatively undeveloped, and the impact of new ideas and methods still has affected dir.-ctly only a comparatively small proyIrtion of the entire pop- ulation of 16,000,000. But the seeds have been sown for much wider advance- ment in future generations. Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 E Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT The moat notable changes are visible in the fields of education, gov- ernment administration and economic development. Despite the serious decima- tin or the, Ethiopian intelligentsia during the Italian occupation, the govern- ment has pushed energetically ahead since its return in 1941 toward the goal of education for the masses. Education is of major concern to the Emperor and is allotted over 10 per cont of the national budget. 3tudent enrollment in public schools rose from 19,000 in 1943 to over 60,000 in 1952, including more than 6,000 girls. The number of government schools--most of them with only 4 or 5 grades and only 4 of them secondary increased from 120 to over 500. Ethiopian teachers, most of whom have had only a few years of schooling, now number over 2,000 in contrast tolOttenth that amount before the war; and fLreign teachers, over 300 instead of about 40. To the various specialized post-primary schools already in existence was added in 1951, a university col- lege of arts, sciences, and law; an agricultural college along with other agricultural and technical schools are now being planned. Despite these steps, there is wide room for improvement, as the Ethiopian Government is well aware, in such matters as teacher training, expanded schooling, and a more varied and practical curriculum. The structure of government was reorganized after 1941 with much great- er centralization and unification of control and the adoption of such innova- tions as a budget, centralIzel accounting, and a more modern system of taxa- tion and currency. There are etill too few qualified persons to handle the governmental workload, a corr-.1:pending reluctance of ministers to delegate responsibility to subordinates, and--ao in all governmentu--problero of bur- eaucratic jurisdiction. The great need for technically trained personnel will continue for many yearsdespite the increasing availability of Ethiopians with higher education. Foreign advisers still play an important role in cer- tain of the ministries. Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT The Ethiopian economy, based primarily on the export of coffee, 1150es and skins, cereals, pulses, and oilseeds, has enjoyed a postwar prosperity reflected in balanced budgets and favorable balances of trade. Long handicapped In further economic expansion by its limited communication facilities, Ethiopia is now beginning to reap the benefits of loans from the International Bank for Reconstruction and Development, which, together with its own expenditures, are now being used to improve roads and telecommunications as well an to finance the operations of a development bank. The country is new raising sugar cane for the first time in quantities which in the near future should be enough for Its own domestic requirements. Similar production plans are under connidera- tion to end the need for imports of raw cotton. With the help of technical aasistance from the un and Specialized Agencies of the UN, many other improve- ments are underway in agriculture as well as education and health. Thus, a cattle rinderpest control program is part of a wider sc.:ieme to use more fully the potentialities of Ethiopia's large livestock population. Other promising signs of economic activity include the successful operations of the Ethiopian An linen, Inc., the search for oil, thus far without discovery, and the con- tinued interest of foreign investors in ponnible opportunities within the country. While the government officially welcomes investors, it has not often thus far taken prompt action to facilitate their plans. FeJleretien. The federation, as a result of UN decision, of Eritrea with Ethiopia under the Crown cf the Emperor in September l92 assured Ethiopia a longsought direct access te the sea, an enlarged free trade zone, and more diversified labor skills. It also removed Ethiopia's anxiety that Eritrea might bc occupied by a future aggressor, and it brough into closer contact peoples with some common geographic, historic, and ethnic ties. At the same time Eritrea was assured by the UN resolution, among other things, of an or For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 E Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT portunity for local self-government, protection by the feleral government against possible external aggression, and the removal of the few existing impediments to the free flew of trade with Ethiopia, its chief source of grain supply. Grant tact and felxibility will be essential on the part of both Ethiopians and Eritreans if the new federation is to function harmoniously. While the trend in recent years within Ethiopia has been toward the strengthen- ing of the central government's authority over the provinces, thc soparate au- tonomy of Eritrea may stimulate desires in some of the Ethiopian provinces for similar status and privileges. The urban inhabitants of Eritrea have been disturbed by the rise in the cost of living immediately after federation, as a result of higher customs and ether duties. Ethiopia, however, has as- sured the United Nations that it will respect Eritrean autonomy and grant Eritrea all necessary economic assistance. T.,-.1e in Tnternntionnl Affairs. The emergence of Ethiopia from its centuries of isolation to active participation In affairs of the outside world reflects the trends toward modernization already noted within the country as well as the political sophistication of its Emperor. represented abroad today by at least 26 diplomatic and consular posts, Ethiopia has joined folly in postwar international activities since the Pan Francisco Conference in 1.945. Despite its failure in 1935 to receivn effective aid from the Leaguo of Nations against Fascist Ethiopin's subsequent sufferings have if anything reinforced its advocacy of the principle of cellcotive security. Striking evidence of this position was Ethiopia's sending of troops, who gain- ed a high reputation for valor, to join the UN military effort in Korea. In December l92, the Emperor declared in a press interview not only that Ethiopia would do its utmost to join a Middle East Defense Organization Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 E Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0 CPYRGHT If one wore established but sloe that he would welcome an American military mission to help modernize hio forces. The US and Ethiopia in May l95 c,r.- eluded a Mutual Defense Assistance Agreement under which the US will supr1-7 military aid and training assistance and thus enable Ethiopia to strengthen its own internal defense and capabilities for joining in the collectivo fence of this part of the frec world. In determining that Ethiopia was eliG? ible for grant aid under the Mutual Security Act, President Eisenhower took into consideration Ethiopia's strategic position in the Near East and Red Sea area and the importance of Ethiopia's defensive strength to the seculity of the US. From the foregoing discussion it should be clear that the former Italian Colonies and Ethiopia have made steady progress since the war toward modern self-goverment and, in certain territories, toward economic viability. These accomplishments are magnified in the light of the physical and human handicaps under which they have been achieved. While these difficulties are oimilar to those found elsewhere in colonial Africa, they appear greater in some respects, given the new cr promised independence of some of these ter- ritcrieo and their limited resources. Approved For Release 2001/09/11 : CIA-RDP80-00809A000500330011-0