(FORTUNE Magazine) – The state of emergency that a defiant President Pieter W. Botha declared in South Africa inspired near-unanimous criticism abroad -- and redoubled pressure for economic sanctions against Pretoria. Botha had acted, in the face of almost certain international censure, because racial violence was mounting daily, and more seemed inevitable on the tenth anniversary of the Soweto uprising of June 16, 1976. The rand was falling. Right-wing Afrikaners were up in arms. The day of Botha's decree, a seven-member ''Eminent Persons Group'' -- a committee of prominent British Commonwealth citizens headed by former Australian Prime Minister Malcolm Fraser -- issued a damning report predicting a ''racial conflagration'' in South Africa and calling for sanctions. In Washington the House now seems likely to pass a bill mandating stronger economic sanctions than those imposed by President Reagan last year. Among other things, the bill would prevent South Africa from receiving new U.S. investments, bank loans, and energy technology. As the situation deteriorates, foreign businessmen in South Africa can only watch and hope. Some 30 European and U.S. banks are negotiating with South Africa for the repayment of $14 billion in short-term debt, frozen by Pretoria last September. They can hardly force the government to make political reforms that might help stabilize the economy. ''We understand the South African mentality,'' says a banker close to the talks. ''If we push too hard, they just may say, 'Screw it,' and default. So we'll wait and see.'' Many U.S. corporations have seen enough. Fifty-one have pulled out since January 1985, and more are expected to follow. The 250 or so that remain wield diminishing influence. Says an American who has consulted for several multinationals doing business in South Africa: ''Events have superseded anything corporations can do. There's not much of a role for them in such a volatile and violent environment.''