Conflicts strain U.S.-S. Africa ties Both governments lodge objections

October 09, 1997|By Gilbert A. Lewthwaite | Gilbert A. Lewthwaite,SUN FOREIGN STAFF

JOHANNESBURG, South Africa -- American profit and South African pride are at stake in two conflicts straining the normally cordial relationship between the Clinton administration and the government of President Nelson Mandela.

South Africa has taken extreme exception to the use by FBI agents of phony South African identities to arrest a Pentagon attorney, her husband and another man accused of spying for East Germany and trying to spy for the former Soviet Union and, more recently, South Africa.

And the United States is objecting to a South African plan to legalize the import of cheap foreign drugs in an apparent breach of international patent law, threatening to undermine millions of dollars in sales of U.S. propriety medicines here.

The U.S. ambassador to South Africa, James A. Joseph, is embroiled in both disputes.

He has voiced U.S. objections over the proposed foreign drugs law. In the FBI's use of South African identities to arrest the three alleged spies in a Washington sting operation, Mandela's deputy, Thabo Mbeki, and Foreign Minister Alfred Nzo have lodged an objection with Joseph.

Mbeki, in a statement issued through his spokesman Thami Ntenteni, said the use of the phony identities "was done without reference to or the knowledge of the South African government or any of its agencies."

He added: "The South African and U.S. governments are discussing this matter."

A U.S. diplomat confirmed that the ambassador had spoken with the South African representatives. He refused to give any other details.

One of the South African identities assumed by the FBI was that of Ronnie Kasrils, the deputy defense minister.

In a television interview, Kasrils said he had received a letter in 1995 from one of the alleged spies, Theresa Marie Squillacote, praising his book "Armed and Dangerous." He sent her a thank-you note in a Christmas card. The FBI, who had Squillacote under surveillance, was aware of the correspondence.

In the FBI's sting operation, agents posed as South Africans sent by Kasrils to obtain secret information from Squillacote, 39, who is accused with her husband, Kurt Alan Stand, 42, and James M. Clark, 49, of conspiracy to commit espionage.

'Innocent correspondence'

"I've not been involved at all," said Kasrils. "I feel the FBI, in entrapping this individual, used my name and that very innocent correspondence: my letter to her."

He added that he was seeking legal advice but hoped the case would not damage the U.S.-South African relationship.

The drugs controversy stems from a proposed law -- initiated by South Africa's health minister, Dr. Nkosazana Zuma -- that is working its way through Parliament. It has provoked reaction not only from the Clinton administration and U.S. pharmaceutical companies, but also from European countries, particularly France and Switzerland, which have large pharmaceutical industries.

The proposed law is part of the Mandela government's effort to make health care more affordable and accessible. It would allow the minister of health -- "notwithstanding anything to the contrary contained in the 1978 Patents Act" -- to import cheap, substitute medicines and register them in South Africa.

In a letter to Abe Nkomo, a member of the ruling African National Congress party and chairman of the Parliament's health committee, Joseph said the Clinton administration was concerned over "the apparent infringement of intellectual property rights."

Noting that the proposal gave the health minister the power to deny patent rights currently protected under South African law, he said:

"We are concerned [about] the public policy implications of a law which would seem to infringe on the intellectual property of a patent holder, for even the best reasons, and especially if the power to undertake such action is vested in a single individual."

Companies warn of losses

Echoing that concern, executives of U.S. pharmaceutical companies operating in South Africa, warned Nkomo's committee this week that the law could provoke factory closures, job losses and a drop in foreign investments on which the government is banking for economic growth.

Donald de Korte, chief executive officer of Merck Sharp & Dohme, which returned to South Africa in 1996 after a 10-year apartheid-era absence, told the panel that his company, which employs 300 locally, would be forced to consider pulling out of South Africa if the law was passed.

He warned that the proposal could produce "a flood of fake medicines." It would also threaten multinational investment in the country.

"It will inevitably send the wrong signals to existing and potential foreign investors of stature, and will place South Africa in association with the countries of the world that are the most egregious patent law violators," de Korte said.

Eli Lilly's Noel Dolman, speaking for the American Group of Pharmaceutical Cos. in South Africa, told the panel: "The U.S. business community is watching closely for the broader trade and investment implications raised by this legislation."

The law, he said, would compromise South Africa's compliance with the World Trade Organization and its protection of intellectual property rights, reaffirmed as recently as July at a meeting of the U.S.-South African commission.

Zuma has refused to redraft the bill, but she is likely to face increasing pressure, both internationally and from opposition parties at home that oppose the legislation.

"The good name of South Africa internationally is imperiled," said an editorial in the Citizen newspaper in Johannesburg. "If Dr. Zuma does not back down, the government should see that she does."

Pub Date: 10/09/97

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