(FORTUNE Magazine) – South Africa's white minority government faces a potentially powerful new challenge on the labor front. Meeting near Durban, 34 unions representing some 500,000 black workers formed the Congress of South African Trade Unions (COSATU), the largest labor group in the country's history. In its first policy statement, COSATU called on British and American companies to divest their South African holdings. It also demanded the resignation of President P. W. Botha, the nationalization of South Africa's mines, and the abolition of the country's so-called pass laws, which limit the access of blacks to white areas. Speaking before 10,000 supporters at COSATU's first rally, President Elijah Barayi, a gold miner and black activist, warned that unless pass laws were repealed within six months, ''we will instruct everyone to burn their passes.'' Shortly after Barayi's speech, Winnie Mandela, wife of jailed black leader Nelson Mandela, openly flouted a government ban and addressed an emotional funeral rally in Mamelodi, near Pretoria. That sort of open defiance indicates how much the black population has been radicalized by the country's six-month- old state of emergency. It also puts Botha in a difficult bind. If he stands idly by, he appears weak; if he cracks down, he risks setting off more violence.

In the gathering political storm, the voices of U.S. companies in South Africa were also heard. Nearly 200 of them signed a petition asking Botha to end segregated schooling. And another 84 formed the U.S. Corporate Council on South Africa, a new group dedicated to ending apartheid. The council's first act was to endorse a long-standing call by South African businessmen for negotiations on power sharing between the government and black leaders.