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Note: This document is from the archive of the Africa Policy E-Journal, published
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South Africa: Arms Purchases
South Africa: Arms Purchases
Date distributed (ymd): 991212
Document reposted by APIC
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Region: Southern Africa
Issue Areas: +economy/development+ +security/peace+
Summary Contents:
This posting contains a statement following a non-governmental
Swedish-South African conference to discuss recent South
African arms purchases. The groups who sponsored the
conference are critical of the 30 billion rand deal, and call
for a moratorium on the sales until further review. The
posting also contains excerpts from a April 1999 brief by the
Southern African Centre for Defence Information (SACDI) in
Cape Town, as well as additional references to sites with
background information on this and related issues.
+++++++++++++++++end profile++++++++++++++++++++++++++++++
South African Council of Churches Public Policy Liaison Office
9 December 1999
Statement on Defence Expenditure and Poverty Alleviation
On 24 November 1999, the South African Council of Churches,
the Christian Council of Sweden, the Coalition for Defence
Alternative, and the Swedish Fellowship of Reconciliation
convened a seminar on Defence Expenditure and Poverty
Alleviation as part of the "Civil Society Encounter" held in
conjunction with the state visit of the Swedish Prime
Minister, Goran Persson. The meeting was addressed by the Rt.
Rev. David Beetge, Anglican Bishop of the Highveld, Rev. Bo
Forsberg, Director of Diakonia (Sweden), the Hon. Nozizwe
Madlala-Routledge, the South African Deputy Minister of
Defence, and Mr. Roger H�llhag, International Policy Advisor
to the Prime Minister of Sweden.
The convenors thank the seminar presenters and participants
for their commitment to open debate on defence and development
issues. The South African participants also thank the Swedish
government and people for their assistance in the struggle
against apartheid and for their continuing support for
transformation and development in South Africa.
In light of the information presented at the seminar, the four
convening organisations ACKNOWLEDGE that:
- In a situation where the majority of the population live
below the poverty datum line, poverty constitutes the most
significant threat to South Africa's security and democratic
government;
- South Africa's Constitution, in terms of the Bill of Rights
and section 198(a), gives priority to human security over
traditional notions of military security;
- There is no discernible military threat to South Africa to
warrant expenditure of R30 billion on new arms, including
BAe/Saab JAS-39 Gripen fighter aircraft;
- As a percentage of GDP, defence spending has declined
substantially from pre-1995 levels to less than 1,5% today;
- Although expenditure on the current arms procurement package
will be spread over eight or more years, it will necessitate
a 14,9% average annual increase in the defence budget over the
next three years--more than double the average annual increase
planned for any other sector;
- The European Union's Code of Conduct on Arms Exports
(Criterion Eight) requires consideration of socio-economic
conditions in the recipient country;
- The proposed arms procurement package includes industrial
participation, trade and investment agreements (offsets)
valued at R110 billion;
- The South African government claims that the offset
arrangements will generate 65,000 new jobs;
- International research exposes the malpractice of offsets
relating to military expenditure as a scheme to provide
political legitimisation for the large outlays by allowing
policy-makers to point to ultimately non-existent economic
benefits;
- Northern industrialised countries prohibit the use of
offsets in agreements among themselves on the grounds that
they distort markets and encourage corruption;
- Notwithstanding South Africa's desperate need for jobs, the
moral implications and the sustainabilty of job creation
initiatives must be taken into account;
- The armaments industry is capital-intensive rather than
labour intensive and is therefore an poor creator of jobs,
particularly at less skilled levels;
- The armaments industry is invariably heavily subsidised,
diverting public resources away from socio-economic
upliftment;
- The armaments industry's record of corruption gives cause
for alarm;
- South Africa's rearmament may trigger an arms race in the
subcontinent and elsewhere;
- Churches and many civil society organisations in Sweden and
South Africa have consistently called for the abandonment of
the arms sale and the redirection of these funds into
sustainable social investment to enhance human security.
Further, WE RECOGNISE that, in spite of the persistent calls
for a reconsideration of the arms deal, the South African
government and industry representatives from Sweden, Britain,
Germany and Italy met in Pretoria on 3 December 1999 to
finalise the deal.
THEREFORE, WE CALL UPON:
- The South African government to demonstrate its commitment
to fighting poverty and corruption by:
- Publishing complete details of the offset agreements
associated with the arms procurement package;
- Establishing a broadly representative committee (including
civil society representatives) to assess the likely impact of
the offset agreements, to analyse their potential for reducing
poverty and unemployment, and to consider alternative options
for deploying these funds to promote genuine human security
through socio-economic development;
- Initiating an independent judicial inquiry into the
allegations of corruption which have been made in connection
with the arms procurement deal;
- Declaring a moratorium on implementation of the deal until
both the commission of inquiry and the review committee have
completed and published their reports and the public have had
an opportunity to study and debate their conclusions;
- Reconsidering its arms procurement plans in light of these
reports.
- The South African government to promote compliance with the
arms export criteria of the National Conventional Arms Control
Committee by entrenching these conditions in law.
- The South African government to work closely with church,
community, and other civil society organisations to develop
and implement creative plans for the conversion of military
bases and defence industries to productive civilian use.
- The Swedish government and Saab to cooperate fully in these
inquiries, to suspend the sale of arms to South Africa until
the review process is complete, and to urge the British,
German, and Italian governments and suppliers to take similar
action.
- Churches and NGOs in Sweden and South Africa to continue to
challenge their respective governments to accelerate
demilitarisation, to abandon arms production, to devote public
resources to the reduction of poverty, and to resolve
conflicts without violence.
South African Council of Churches
Christian Council of Sweden
Coalition for Defence Alternatives (South Africa)
Fellowship of Reconciliation (Sweden)
This information is produced and distributed by the Public
Policy Liaison Office of the South African Council of
Churches. The Public Policy Liaison Office monitors and
analyzes key public policy issues under consideration by
parliament and government ministries, alerts government to the
concerns of the SACC, and assists people of faith to be more
familiar with and involved in public policy debates. To be
added or dropped from this distribution list, please
write to [email protected].
For more information, contact:
South African Council of Churches
Public Policy Liaison Office
P.O. Box 2591
Cape Town, 8000
Tel. (021) 423-4261
Fax. (021) 423-4262
Email. [email protected]
Web. http://www.sacc-ct.org.za
Southern African Centre for Defence Intormation (SACDI)
A joint project of the Centre for Conflict Resolution and the
Idasa Budget Information Service
UCT, Private Bag, Rondebosch, 7701, South Africa
Tel: 27-21-4222512; Fax: 27-21-422622;
E-mail: [email protected]
Web: http://ccrweb.ccr.uct.ac.za
Brief No. 2: Guns or Butter?
The SANDF's R30 billion weapons procurement package
On the 18th November [1998] cabinet approved the planned
purchase of R30 billion worth of weapons for the SANDF. The
'procurement package' includes jet fighters from Sweden and
Britain, maritime helicopters from Britain, light utility
helicopters from Italy and corvettes and submarines from
Germany.
Not surprisingly the cabinet decision has provoked widespread
criticism and condemnation from many sections of civil
society, including private sector economists, human rights
organisations, peace groups and church leaders. Much of this
criticism has centred on the opportunity costs of the
procurement package - is it appropriate for government to be
spending vast sums of money on weapons when social services
continue to be desperately underfunded, and when poverty
alleviation and development issues continue to be neglected or
ignored?
Firstly, it is important to note that the cabinet's approval
of 'preferred suppliers' of jet fighters, helicopters,
corvettes and submarines merely confirms the recommended force
design equipment option contained in the 1998 Defence Review,
which was approved by parliament in April this year after a
fairly exhaustive and inclusive two-year public participation
process. During this process, civil society and parliament had
a number of opportunities to critique the financial and
military implications of the various force design equipment
options.
Thus, while many people may still question the military
rationale or justification for jet fighters etc; parliament
and the cabinet have decided in principle that such equipment
is necessary to modernise the SANDF and to meet South Africa's
future defence needs.
However, the approval of these weapons purchases does raise a
number of important financial, economic and political issues.
From a financial point of view, can South Africa afford to
spend R30 billion on armaments, given the government's funding
constraints, its commitment to fiscal discipline and its
stated desire to reduce the country's budget deficit? ...
Government has constantly emphasised the industrial
participation or 'offset' aspects of the weapons package.
Furthermore, it has stated that the contracts and offset
proposals which are attached to the procurement package will
generate investment worth R110 billion in the next 17 years,
and create up to 65 000 jobs over the next 7 years.
Offsets are a common feature of the international arms trade,
whereby conditions are imposed on the foreign supplier of
weapons (e.g. Germany) thereby enabling the purchasing
government (e.g. South Africa) to recover or offset some or
all of the purchase price. Offset schemes are usually designed
to achieve a relocation of economic activity from the country
of the equipment supplier to the purchasing nation. Direct
offsets involve participation of the purchasing nation's
industry in some aspect of the contract for supplying foreign
defence equipment (e.g. South African weapons systems being
purchased for use in German built submarines). Indirect
offsets involve goods and services unrelated to the purchase
of the specific foreign defence equipment (e.g. the German
submarine consortium's proposal to invest US$1 billion in a
flat stainless steel plant at Coega in the Eastern Cape)
In 1997 cabinet approved national industrial participation
(IP) policy which covers direct and indirect offsets related
to all government purchases from foreign suppliers. The
Department of Defence, in conjunction with the DTI, has also
approved policy on defence industrial participation (DIP)
policy). Under this policy all defence imports over US$10
million are required to have at least a 50% (i.e.US$5 million)
industrial participation component, which is targeted at the
local defence industry.
Before attempting to assess the economic dimensions of the
offset aspects of the weapons package, it is worth noting that
in our current economic climate government has every incentive
to 'inflate' the purported economic benefits of the industrial
participation components of the procurement package.
While the industrial participation component of the
procurement package may result in some tangible net benefits
to the South African economy (e.g. direct investment, jobs) in
the absence of detailed information on the foreign suppliers'
offset and industrial participation proposals, government's
claims are difficult to quantify and thus largely speculative.
In addition, if the figures are to be believed, this means
that each new job will cost R1, 7 million to create. This
seems somewhat expensive in the current South African context.
Government has attempted to create the impression that because
of the offset arrangements, South Africa will not have to pay
for the weapons. This is simply not true. Certain parts of the
economy, including the defence industry, stand to benefit from
the procurement package. However, government (i.e. the Finance
Ministry) will still have to find R30 billion to pay for the
weapons. If our exchange rate depreciates significantly over
the payment period, then government will have to find
additional resources.
It has been reported that the offset and industrial
participation agreements only carry a 5% penalty clause. If
this is the case, then there will be little or no incentive
for the European suppliers to honour their offset and
industrial participation agreements.
Furthermore, it is unclear whether government, both within the
Department of Defence and the Department of Trade and
Industry, has the requisite capacity to monitor and evaluate
the implementation of the industrial participation agreements.
For example, will the Minister of Defence be able to report to
parliament on an annual basis on the actual number of jobs
that have been created as a result of the weapons purchases?
Who will take responsibility if the number of jobs created as
a result of the weapons package is significantly below what
was stated at the time of the signing of the industrial
participation contracts?
There are also a number of concerns about the extent to which
the investment attached to the defence industrial
participation agreements represents genuinely new business,
which would not otherwise have been obtained without the
weapons package. If European companies are only willing to
invest in South Africa as a result of major weapons purchases,
what does this say about our desirability as a destination for
direct fixed investment? Put differently, would these European
defence companies have (ever) considered investing in South
Africa without the 'incentive' of the procurement package?
Given the fact that government will in all likelihood proceed
with the planned purchase of jet fighters, helicopters,
corvettes and submarines, it is important that civil society
engages with government to ensure that the country extracts
the maximum economic benefits from the weapons purchases in
terms of investment and job creation in the non-defence
sectors of the economy. Furthermore, civil society should also
assist government in monitoring the European weapon suppliers'
commitment to honouring their offset and industrial
participation agreements.
On-Line Sources for Additional Information on this and related
issues include:
South African Ministry of Defence
http://www.mil.za/
Institute for Security Studies (ISS)
http://www.iss.co.za
Centre for Conflict Resolution (CCR)
http://ccrweb.ccr.uct.ac.za
African Centre for the Constructive Resolution of Disputes
(ACCORD)
http://www.accord.org.za
Coalition for Defence Alternatives Briefing Document, August 1999
http://www.sacc-ct.org.za/cdabrief.html
This material is being reposted for wider distribution by the
Africa Policy Information Center (APIC). APIC's primary
objective is to widen international policy debates around
African issues, by concentrating on providing accessible
policy-relevant information and analysis usable by a wide
range of groups and individuals.
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