(FORTUNE Magazine) – IT IS HARD to think of any U.S. policy more perverse and self-defeating than the policy of trade sanctions and disinvestment aimed against South Africa. Well-intentioned but wrongheaded, these measures are creating many more unemployed blacks and many more white millionaires. Designed to end the abomination of apartheid, they are instead inspiring a thuggish government to roll back reforms. Worse, they are moving the white electorate still further to the right, raising the specter that the current government will be replaced by one still more racist and reactionary. These are the conclusions of FORTUNE'S managing editor after a 12-day trip throughout that tortured but terribly important country, a journey that included interviews with 60 leading South Africans, mostly white liberals, but also some blacks and mixed-race ''coloreds,'' as well as political conservatives. Hear what they say:

Anthony Bloom, longtime champion of human rights, CEO of a $1.3-billion-a- yea r conglomerate, the Premier Group: ''Sanctions and disinvestment simply produce belligerency and defiance among white South Africans and the government.'' Helen Suzman, South Africa's most important liberal, a minority member of Parliament for 35 years: ''Sanctions and disinvestment only make this government more recalcitrant and make its supporters tougher than ever.'' Chief Mangosuthu Buthelezi, leader of the six million-strong Zulu tribe, South Africa's largest: ''Sanctions and disinvestment worsen our position and set the clock back. They are madness!'' The issue has a fresh urgency because Congress is debating a bill that would significantly harden and expand these measures. Since October 1986, the sanctions have forbidden new U.S. investment in South Africa as well as many imports (notably of coal, steel, and farm products) and some exports. The new bill would force all remaining U.S. companies to pull out. It would also ban almost all U.S. exports to South Africa and all imports except strategic metals. The bill stands to sail through the House but faces a tougher time in the Senate, where it probably will either fail to pass or fail to survive a White House veto. In any event, the issue has been thrown into the presidential campaign. Michael Dukakis has endorsed Jesse Jackson's call for burn-the-bridges economic warfare against South Africa. George Bush is resisting. The crusade to end virtually all commerce with South Africa surely will be thrust upon the next President. Everybody admits that sanctions and disinvestment have failed to budge the South African government. Proponents of the new bill concede the point but, turning all logic on its head, argue that the way to make them work is to make them more punitive. Their goal is to isolate South Africa from the world and so seriously cripple its economy that its government somehow will be forced to end its repressive, racist policies and allow the oppressed black majority to take control. In fact, sanctions have slowed but not stopped the expansion of South Africa's economy. That economy has the capacity to grow 5% to 7% in real terms; this year, largely because South Africa is capital starved and sanctions prevent it from borrowing much abroad, the rate may be less than 2.5%. Alas, that is not enough to provide jobs for South Africa's exploding population, which is growing at 3% a year. The people who are not getting jobs are young blacks. Black farm workers, coal miners, and others in industries hit hardest by the sanctions against imports from South Africa have lost jobs by the thousands. THOUSANDS more jobs were lost when U.S. companies pulled out, as more than 160 have done since 1984 in response to pressure from impatient anti-apartheid activists at home. They typically sold their operations to local managers, who often proceeded to cut back, restructure, and lay off. After all, say the new owners, they have to rationalize operations to pay the debts they took on to buy the companies. That's a handy excuse, too, for chopping social programs. U.S. companies in the past eight years have pumped $210 million into housing loans and grants, education and training, college scholarships, clinics, legal aid, and other programs for South African blacks. Many of the subsidies disappear as soon as the U.S. owners do. Cutbacks will deepen if more U.S. firms leave. Says Henry Slack, a director of Anglo American Corp., the gold and diamond mining company that is South Africa's largest: ''I can give you a categorical guarantee that if Johnson & Johnson pulls out, its successor will not provide doctors and clinics with free medical supplies and will not pay the bills to educate the many black doctors that J&J does now.''

But some white South African business people will grow even richer. About 140 already have become millionaires by buying U.S. companies at fire-sale prices. Not all businessmen are happy. Says the liberal Tony Bloom of the Premier Group: ''I'm sorry to see U.S. companies go, even though we ourselves have benefited from disinvestment.'' A number of local managers have also used their new freedom from U.S. control to resume selling to the police and the military. Tian van der Merwe, a liberal member of Parliament, recalls what happened when General Motors sold to a local group who renamed the company Delta Motors. Says he: ''Right away the Delta boys said, 'At last we have Detroit off our backs. Now we can sell armored trucks to the army.' '' The whites in general have responded to sanctions and disinvestment not by giving in but by digging in. Confronted by those and earlier trade restrictions, they have become remarkably self-sufficient. They squeeze oil out of coal and have even built a South African armaments industry, which now is their second-biggest (after mining) and which exports to 23 nations. It is commonly said that sanctions have forced the dominant white tribe of Afrikaners to go back to the laager, to circle their wagons as their forefathers did when attacked. Just as the bombing of London in World War II raised the British resolve to resist, so the measures against Pretoria have moved white South Africans to resist. Crying defiance and exploiting the backlash, the far-right Conservatives won 27% of the vote in the last election, in May 1987, and displaced Helen Suzman's Progressives as the official opposition party. Many Progressives voted instead for the ruling Nationalist Party to buttress it against the fast-rising Conservatives. The Conservatives, at least three of whose 22 members of Parliament are also members of the neo-Nazi Afrikaner Resistance Movement, want to roll back the Nationalists' reforms. They would, for example, outlaw black trade unions and try to restrict the movement of blacks from place to place. Says Budget Minister Kent Durr, who identifies himself as a liberal Nationalist: ''The neo-Nazis love sanctions.'' ADVOCATES OF still stiffer sanctions and total disinvestment contend that the political perils and the privations inflicted on blacks are a small price to pay. Extremists even believe that a severe international boycott, by hastening the rise of the far right and further polarizing black and white, will bring about a bloody revolution, which they think is a necessary step to black power. Aside from the immorality of this argument, the trouble is that the blacks could scarcely win such a confrontation because the white government has all the artillery. Yet the American extremists, comfortable in their Georgetown or Palo Alto sanctuaries, seem prepared to fight to the last South African black. They should ask the blacks about that. Listen to James Ngcoya, president of the 100,000-member South African Black Taxi Association: ''I've heard people say that if sanctions make black people suffer more, that does not matter because they're suffering already and won't mind suffering some more. I've even heard them say that whether more sanctions will help to bring down apartheid doesn't matter because imposing sanctions puts America on the right side of history. Does that mean you really do not care what the black people of South Africa want? You really do not care about what will help us? I ask you to listen to our voices before you decide what is good for us, before you decide that black children must go hungry so you can be on the right side of history.'' And Chief Buthelezi says: ''When you try to destroy an economy that has achieved a vibrancy that has not been achieved anywhere else in Africa, you are sentencing us to starvation.'' True, some prominent South African blacks and coloreds still want tighter sanctions, including the Most Reverend Desmond Tutu, the Nobel Prize-winning Anglican Archbishop of Cape Town; the Reverend Allan Boesak, president of the World Alliance of Reformed Churches; and the leaders of the largest black trade union, COSATU, and of the outlawed African National Congress, which is still the most popular among the many divided, fractious, and government- infiltrated black political organizations. On the other hand, sanctions are anathema to the Zulus' 1.2-million-member United Workers Union of South Africa plus some large black church groups including the Zion Christian Church and the United Congregational Church. Very significantly, notes Indiana Republican Congressman Dan Burton, vice chairman of the House subcommittee on Africa: ''In 14 polls taken over four years in South Africa by a variety of private institutes and newspapers, all but one showed blacks opposing disinvestment and sanctions, most by a margin of three or four to one.'' Faced with its policy failures, what should the U.S. do now? Above all, it must once again become actively engaged in South Africa. With its current policy of withdrawal, the U.S. has forfeited almost all influence over the Pretoria government and much of its ability to help South African blacks. If that is to change, sanctions must go. Lifting them seems impossible in the current environment, but the U.S. could bargain to remove sanctions in return for human rights concessions by Pretoria. At the same time, the 150 American companies still in South Africa should be encouraged by their shareholders and directors to remain, to expand their social programs, and to train and promote more blacks for management and technical jobs. (U.S. firms have not done nearly enough training and promoting in South Africa, but they have accomplished far more than almost all local companies.) AMERICAN universities and corporations should give scholarships by the thousands to South African blacks. Says Sylvia Vollenhoven, a prominent colored journalist in Cape Town: ''You should bring to America just about any black who has any kind of power, just to show him what real freedom looks like. Every radical who goes will come back with his ideas changed.'' American publishers should send textbooks to black schools in South Africa, which desperately need them. Most U.S. publishers refuse to sell texts to South Africa. What makes them think South African children are better off with government-approved South African texts -- or none -- than with U.S. books? American companies and individuals should be encouraged to invest in black- owned ventures in South Africa. Despite police harassment, a surprisingly large group of black entrepreneurs is rising. They own small printing businesses, food shops, restaurants and bars; they drive minivans full of workers from the segregated black townships to their jobs in white cities and back; they sew dresses and make shoes and repair cars. Not even the worst repression has been able to break the entrepreneurial spirit of these determined people. Helen Suzman argues persuasively that it was the rise of black economic power that forced the government to make concessions to blacks. The hated Pass Laws and Influx Control, which restricted their movements, were repealed in 1986 largely because the huge rush of blacks to the cities to fill jobs had made those rules unworkable. The law reserving skilled jobs for whites was repealed because a growing economy needed more skilled labor. Black trade unions were recognized because businesses needed a force to bargain with to , halt wildcat strikes. Those unions now are potent and skillfully led.

The blacks' surest hope for gaining political power is to gain still greater economic power. The faster the economy grows, the more rapidly they can do that. Budget Minister Durr puts it a different way: ''No declining economy in history has ever delivered democracy. If people want to help democracy, they must help the economy.'' If and when the U.S. once again becomes an active player in South Africa, the U.S. -- along with Britain, West Germany, Japan, and other allies who have not adopted widespread sanctions -- can press Pretoria for political concessions. Among them: Lift the state of emergency under which thousands of people have been jailed without due process. Free African National Congress hero Nelson Mandela and many other political prisoners, and legalize the ANC. Though the exiled ANC is strongly Communist influenced and resorts to terror, the liberals among South African business leaders believe that it will become more reasonable when it is allowed to reenter -- and obliged to compete in -- the political process. Surely Mandela will be easier to deal with than some fiery radicals among the ANC young. In addition, the inhumane Population Registration Act, the Group Areas Act and the Land Act -- which segregate blacks, coloreds, and Asians from whites and determine where they may live -- must be repealed. Most important, Pretoria must set a timetable for giving the vote to blacks. Accomplishing all that will be difficult and may take longer than most Americans would like. But the U.S. stands a far better chance of making progress if it abandons sanctions and becomes involved again in South Africa instead of toughening an already bankrupt policy and just walking away.