Thank you for the invitation to make this presentation. Economists Allied For Arms Reduction is an international organisation established in 1988 in New York, whose directors include eight Nobel laureates as well as renowned economists such as John Kenneth Galbraith and Jeffrey Sachs. Ecaar is accredited to the United Nations, and now has affiliates in twelve countries including South Africa. As you will see on the Ecaar letterhead, Professor Paul Dunne is chair of Ecaar--UK.
May I introduce my colleague, Avril Harding? I am Terry Crawford-Browne, chair of the South African affiliate. I am a former Regional Treasury Manager for Nedbank, and was mandated to establish Ecaar--South Africa in 1995 at a time when Archbishop Desmond Tutu had asked me to represent the Anglican Church at the Cameron Commission of Inquiry into Armscor. Since then, Ecaar--South Africa has operated mainly in conjunction with other church-based NGOs through the Coalition for Defence Alternatives.
With Archbishop Njongonkulu Ndungane's support, we are now in the process of opening an office at 1 Government Avenue between St George's Cathedral and Parliament. Our function will be a civil society watchdog to monitor arms and human security issues. Having been responsible for forwarding the allegations and evidence of corruption relating to the arms acquisition programme to Patricia de Lille, MP and Judge Willem Heath, we intend to ensure that this matter of intense national debate is thoroughly and exhaustively investigated.
It is pleasing that so many government authorities are now pledging a thorough investigation. It is however, now eighteen months since Archbishop Ndungane first called for an independent judicial commission of inquiry, a call he repeated just two weeks ago.
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Just what are South Africa's economic priorities? Our democratic government came to office in 1994 pledged to the Reconstruction and Development Programme, which at that time was estimated to cost R39 billion.
Even were the arms deal "squeaky clean," the government is spending R43 billion on warships and warplanes when South Africans face catastrophic crises of HIV/Aids, cholera, malaria and tuberculosis -- all of which have devastating economic consequences.
Nothing so illustrates the betrayal of the struggle against apartheid that there is money for armaments, but not for social upliftment. Military spending is by far the fastest growing item in the national budget, and is squeezing out other priorities. Projected expenditures for the years 1999 to 2003 forecast annual increases for Defence of 15.5 percent, for Health of 6.6 percent, for Education of 5.7 percent and for the Police of only 5.4 percent.
The Bill of Rights contained in our South African Constitution requires implementation of socio-economic human rights. The Constitutional Court last year upheld that imperative in the landmark Grootboom case.
The Defence White Paper released in May 1996 had noted that "there is no foreseeable conventional military threat to South Africa,"… and that "the government has prioritised the daunting task of addressing poverty and the socio-economic inequalities resulting from the system of apartheid."
The South African Constitution similarly declares in Chapter 11, Section 198 (a) that:
National security must reflect the resolve of South Africans, as individuals and as a nation, to live as equals, to live in peace and harmony, to be free from fear and want and to seek a better life.
Human security relating to people -- jobs, housing, health, education, clean water, freedom from fear of crime -- is therefore given constitutional priority in South Africa over traditional notions of military security relating to states. The rationale for South Africa's expenditure of R30 billion on armaments was that foreign investments and exports of R110 billion would create 64 165 jobs.
South African taxpayers were expected to accept ministerial assurances without question, and were prohibited details of the offset contracts in terms of "commercial confidentiality" clauses. The Auditor General has subsequently reported to the Standing Committee on Public Accounts that the performance guarantees are completely inadequate.
Offsets are prohibited in civil trade arrangements between the European Union and the North American Free Trade Area because they are impossible to monitor, distort markets and are notorious for corruption. South Africa should likewise prohibit offsets. It is extraordinary and appalling that Armscor, in conjunction with the Department of Trade and Industry, has successfully promoted such thoroughly discredited arrangements as the basis of South Africa's economic policies in the Industrial Participation Programme.
The system originated as a form of barter amongst the Soviet Union and its Comecon partners in an effort to bypass foreign exchange markets. It was adopted in South Africa during the PW Botha era in an attempt to bypass sanctions. For instance, South Africa had two bulk iron ore carriers built in Bulgaria, and paid for them with shipments of iron ore. The Soviet Union no longer exists, having gone bankrupt on military spending, but its economic policies are now associated with "financial basket case" countries.
In 1994/95 when the South African government proposed to purchase four Spanish corvettes, the offset benefits were publicly declared to be worth R4.8 billion and would create 23 000 jobs. Neither Armscor nor the SA Navy was able to quantify how the
23 000 jobs would be created. Analysis by the Deep Sea Trawling Industry Association showed that very far from creating 23 000 jobs, the Spanish proposals would have destroyed what remains of South Africa's fishing industry which employs about 85 000 people.
Minister Joe Modise, during a meeting in August 1995, conceded the accuracy of that assessment. It was therefore astonishing and bizarre to hear him on SABC radio in early 1998 declare that offsets were the contribution of the Department of Defence to redressing the problems of gangsterism and unemployment on the Cape Flats.
The only function which offsets perform is to provide political legitimisation for large financial outlays required on modern armaments by allowing governments to point to apparent, but ultimately non-existent, economic benefits including jobs.
The £20 billion Al Yamamah arms deal between Britain and Saudi Arabia was supposed to create 75 000 jobs in Saudi Arabia. Instead only 1 600 jobs resulted, of which 300 were filled by Saudi citizens and the rest by imported expatriates. The report of a British parliamentary investigation into that deal, with which Margaret Thatcher was so closely associated, was suppressed because it was too politically-sensitive.
Offsets are a scam promoted by the armaments industry, with connivance of politicians, to fleece the taxpayers of both supplier and recipient countries. It is shameful that our government, having so many other socio-economic priorities, has squandered time, energy and money upon an absurd proposition that offsets will create 64 165 jobs.
The offsets arrangements are split between the so-called DIPS and NIPS. The Defence Industrial Participations are a scheme by which Denel hopes to disguise its bankruptcy through a preferred relationship with BAe Systems. Numerous joint venture agreements have been signed in recent years between Denel and BAe Systems.
Jane's Defence Weekly estimates that the offset benefits to Denel will amount to R7.5 billion. About R4 billion in public assets has been invested in Denel. Its 1999/2000 financial statements are so qualified by Pricewaterhousecoopers that they are barely worth the paper they are written on. Expenditure on armaments from one branch of government to another to disguise Denel's calamitous financial circumstances amounts to financial "spindoctoring" with public monies.
The Auditor General's report to the Standing Committee on Public Accounts noted that BAe Systems had been unduly favoured in the arms acquisition process.
Tens of billions of rands were squandered on South Africa's armaments industry and the military by the apartheid government. Professor Sampie Terreblanche estimates the expenditure from 1977 to 1994 at about R130 billion. According to General Constand Viljoen, Armscor executives and certain politicians "drove" not only the armaments industry but also the economy.
The journalist Ken Owen has commented:
The evils of apartheid belonged to the civilian leaders; its insanities were entirely the property of the military officer class. It is an irony of our liberation that Afrikaner hegemony might have lasted another half century had the military theorists not diverted the national treasure into strategic undertakings like Mossgas and Sasol, and Armscor and Nufcor that, in the end, achieved nothing for us but bankruptcy and shame.
South Africa's economy has been stagnant since the 1970s, in very large measure due to economic resources spent on the military. In 1970 the unemployment rate was estimated at 8 percent: it is now about 35 percent. In 1970 the rand/dollar exchange rate was US$1.40 per Rand. It is now almost R8 per dollar. South Africa has been one of the world's economic disaster stories.
Why perpetuate economic failure with more of the same myth and nonsense that the armaments industry creates jobs? The armaments industry is a capital intensive rather than labour intensive industry. It is a particularly poor creator of jobs. It is a heavily subsidised industry in all countries, meaning that public resources are inevitably diverted away from social upliftment.
The United States subsidises its arms exports to the extent of 63 percent. Even the Europeans cannot compete. The idea that there is a profitable niche for the South African armaments industry is absurd. How many billions have been wasted on the rooivalk without one export sale?
The European armaments industry is notorious for corruption. The Swedish Bofors artillery deal with India in the 1980s included bribes to Indian politicians and generals, and led to the collapse of the Gandhi government. The son of former President Francois Mitterand is presently on trial in France for arms trafficking in Africa.
President Jacques Chirac was himself so closely associated with French weapons supplies to Saddam Hussein that he was nicknamed Monsieur Iraq. Former Chancellor Helmut Kohl's reputation has been shredded by revelations about his connections to the German armaments industry. The Italian company Agusta, the supplier of utility helicopters, was involved in payment of bribes to Belgian politicians including the former Secretary General of NATO.
I have already mentioned the British/Saudi Arabian Al Yamamah deal: there are numerous other British corruption scandals. When Queen Elizabeth visited Cape Town in March 1996, the royal yacht Britannia was reported as having been fitted out as a floating British armaments industry exhibition. If true, it illustrates the influence the European armaments industry holds over European governments.
South African church leaders and NGOS repeatedly lobbied the British and Swedish governments to cancel the weapons contracts. Prime Ministers Tony Blair and Goran Persson were instrumental in the adoption of the European Union's Code of Conduct on Arms Exports, Criterion Eight of which requires consideration of the socio-economic conditions in recipient countries.
Under no circumstances can European governments plead that they are unaware of the crises of poverty that afflict South Africa and the rest of our continent. Some 90 percent of the war casualties in Africa are not soldiers, but civilians -- mainly women and children.
Representations to Mr Blair when he visited Cape Town in January 1999 elicited the shameful reply from the British High Commission that "South Africa has the right…to secure maximum job creation through industrial participation programmes."
Lest you think I am overstating the matter, I refer to Professor Anthony Holiday's article in the Saturday Argus: "the international arms merchants…are among the most powerful…multi-national companies… in the politico-economic universe which is the new millennium. The merchandise they sell gives them the…influence that can topple governments."
Tragically and disgracefully, these international merchants of death have been invited to South Africa by our own government. I refer to the address to the nation on January 19th by President Thabo Mbeki and to the letter from Deputy President Jacob Zuma to Dr Gavin Woods of the same date. President Mbeki declared:
We will not submit to any demand being made with regard to the contracts we have entered into with other governments and major international companies, that we default on our contractual obligations, simply because some people find it in their interest to spew out a flood of unsubstantiated allegations.
Deputy President Zuma was even more blunt. He declares on page 6 of his letter to Dr Woods QUOTE:
The seriousness with which you take your assumption that our Government, the transnational corporations and foreign Governments are prone to corruption and dishonesty, is illustrated by the steps you have taken to ensure that investigations take place.
As you know, the acquisition process was led by a Ministerial Committee, which was chaired by the then Deputy President. The committee reported to the Cabinet. The Cabinet gave final approval for the acquisition.
The members of the Cabinet Committee were the then Deputy President, Thabo Mbeki, and Ministers Joe Modise, Trevor Manuel, Alec Erwin and Stella Sigcau.
The prime contractors are Blohm + Voss, Thompson CSF, Ferrostaal AG, Thyssen Nordseewerke GmbH, Agusta un' Azienda FINMECCANNICA S.p.A., British Aerospace, British Aerospace (SAAB) and others, all of which are well-known and prestigious international companies.
The foreign governments involved are those of the UK, Sweden, Germany and Italy.
Your assumption of corruption and dishonesty is therefore specifically directed against these personalities, governments and corporations.
Natural justice demands that you both substantiate the allegation that the persons, governments and corporations we have mentioned are prone to corruption and dishonesty and provide even the most rudimentary or elementary evidence that any or all of these acted in a corrupt and dishonest manner. UNQUOTE
In response, I refer to last Friday's issue of the London Financial Times. The front page headlines reads "Star Witness in Dumas corruption trial arrested." On page 3 the headlines read "Light shed on an extraordinary past" and "Sirven set to unpack explosive evidence."
Roland Dumas is a former French foreign minister during the Mitterrand era. The Elf-Aquitaine Affair" has been a seven year investigation into France's most convoluted political and financial scandal. Elf was a French oil company front as the covert diplomatic arm of the French government and a channel for illicit funds. It is said that about FF25 billion (about R25 billion) is involved.
Amongst the allegations are that Elf played an intermediary role between the Taiwanese military and the French Thomson CSF to which Deputy President Zuma refers as being a well-known and prestigious international company. It was reported in the Mail and Guardian on January 19, 2001 that bribes paid by Thomson CSF in respect of a Taiwanese frigate contract, which is central to the Dumas scandal, were laundered through South African banks.
The Auditor General's report and the SCOPA hearings in October referred to the role of Thomson CSF in South Africa's naval procurements, and that a South African company had been prejudiced by Thomson's selection. That information was amongst the allegations submitted to Judge Heath by Patricia de Lille, MP in November 1999, and given to her by ANC intelligence operatives.
The allegations against Elf go much, much further. They include its involvements in deliberately fanning the wars in the Congo, Angola and other countries on our African continent. But these, Mr Chairperson, are entities which President Thabo Mbeki and Deputy President Jacob Zuma refer to as "well-known and prestigious international companies." If you want further details I refer to you to the website www.ft.com/dumas
The ANC intelligence operatives and whistleblowers declare that serious as are the allegations regarding the arms acquisition programme, even more ominous is the use of South African banks for money laundering. South African banks pride themselves on their "First World" infrastructure, yet their policing of illicit and fraudulent banking transactions is notoriously lax. South Africa has become the ideal transit point for international criminals and money laundering, as indicated in the payment of bribes by Thomson CSF for the Taiwanese frigate deal.
The International Monetary Fund, the Pope and others have called for an embargo on arms sales to Africa. Instead, European governments actively market armaments to "Third World" countries, whose people then become mere cannon-fodder. The hypocrisy of European governments knows no limits.
It is standard practice for the armaments industry to claim that it earns foreign exchange and creates jobs. In South Africa, arms exports in 1999 amounted to R1.2 billion, only 0.5 percent of total exports or about 0.17 percent of our GDP. It is an economically pathetic return on public investment, but it is extraordinary that Armscor and Denel are still permitted to "wag" the entire country.
What of the social consequences of the "killing business" both in South Africa and foreign countries? How many members of this committee could face the mother -- either a South African mother or a mother in India, Algeria, Colombia, Rwanda, Angola or the Congo -- to tell her that the Denel-manufactured bullet or shell that killed her child provided someone with a job?
The South African armaments industry is not economically viable. Even worse, it is a moral cesspit, as confirmed by both the Cameron Commission and the Truth and Reconciliation Commission. The late Oliver Tambo described it as a "frankenstein monster which cannot be reformed and must be destroyed."
Thus, for both economic and moral reasons the Anglican Church since 1990 under Archbishop Tutu and now under Archbishop Ndungane has repeatedly called for a total prohibition on exports of armaments from South Africa, and for the conversion of the assets of Armscor and Denel to peaceful purposes. This is one matter on which ethics and economics co-exist.
Our government, sadly, succumbed to the economically ludicrous proposition that expenditures on armaments would produce jobs. Armscor's chairman Ron Haywood declared repeatedly that the Europeans were so caught up in offsets and Madiba magic that they would pay back R4 for every R1 spent on armaments. "What businessman," Haywood would say, "could turn down such a deal." It is appalling that our government officials and ministers were so gullible.
The purchase of three German submarines for R5.212 billion was declared as producing offsets worth R30.274 billion to create 16 251 jobs. The major offset benefit was said to be construction of a US$1 billion stainless steel plant at Coega about 25 kilometres east of Port Elizabeth.
The Eastern Cape is desperate for job creation opportunities. Yet environmental and financial studies have shown Coega to be a disaster -- another Mossgas-in-the-making. The Eastern Cape is perennially drought-stricken. The introduction of a "waterholic" steel plant would have devastating consequences for the existing agricultural sector in the area. About 2 000 people will have to be forcibly removed from their homes -- an ominous reminder of the apartheid days.
There is already one stainless steel plant in South Africa with annual capacity of 600 000 tons. The world stainless steel market is experiencing severe depression. Coega would hinge on heavily-subsidised electricity, meaning that people whose homes only now are being electrified will have to subsidise steel production for exports markets in Germany.
And the job creation estimates have been scaled back by 90 percent from 16 251 jobs. At best 1 000 people might be employed at the stainless steel plant -- if it ever happens which is increasingly unlikely. Nor will these 1 000 jobs make any contribution to the alleviation of unemployment amongst unskilled people in the Eastern Cape. They will be highly-skilled jobs, perhaps most of them being filled by imported expatriates.
Coega would be a repeat of the Saldanha Steel plant, which a few years ago was hailed as the economic salvation of the Cape West Coast. The late Ian Moutrie, then the largest private shareholder in Iscor, correctly alerted the government and the South African public that Saldanha Steel would be a financial and environmental disaster. Nonetheless, the former Minister of Finance, Derek Keys approved a R1 billion tax credit for its construction. About 4 500 workers were then retrenched at Iscor's Vanderbijlpark plant to make way for Saldanha Steel.
At R18 million per job for 650 high-skill jobs, Saldanha Steel is yet another "white elephant" typical of the consequences when "securocrats" determine South Africa's economic policies. Such massive capital-intensive mega-projects contribute nothing to redressing our country's unemployment crisis amongst ill-educated and unskilled eople.
A submarine, a fighter aircraft, a frigate or a tank are not consumer goods. They do not add to the present material standard of living. They also do nothing for the economy's capacity to produce, and do not augment the future standard of living.
In a developing country such as South Africa, desperately trying to lift our people out of poverty, what is needed is increased education of the labour force, improved health care, an expanded transportation and communication system, and more and better production capital. Present living standards have to be improved. Future capacity to produce has to be strengthened by national investment in socio-economic priorities.
The armaments industry compounds our problems. A critical resource in very short supply is a highly educated, skilled labour force. Yet it is precisely this type of labour that gets sucked into Denel and the armaments industry.
I urge this parliamentary committee to prevail upon the Cabinet and government to abandon this economic madness. I urge the government to send the arms traffickers packing.
There is a remedy, which is simple, rapid and would be without cost to South Africa. The Minister of Finance, Trevor Manuel in January 2000 signed government guarantees to the British Export Credit Guarantee Department in respect of finance from Barclay Bank, and to the German Hermes export credit agency in respect of Commerzbank.
It is internationally accepted commercial practice that contracts tainted by corruption are null and void, and may be cancelled. On the Auditor General's report to the Standing Committee on Public Accounts, there is more than ample reason to cancel the contracts as being fraudulent.
Minister Manuel should therefore repudiate those guarantees as a matter of urgency.
Terry Crawford-Browne
February 5, 2001
Appendix 1
Coalition for Defence Alternatives
SOUTH AFRICA'S WEAPONS PROCUREMENT PROGRAMME
The condoning of the practice of offsets to promote the sales of weapons to South Africa by member states of the European Union makes a mockery of both the European Union's Code of Conduct on Arms Exports, and also of the South Africa-European Union trade agreements.
Given the Government Procurement Agreement between the United States, Canada, the European Union and other countries, it is imperative that international "best practice" is also applied in trade arrangements between the European Union and South Africa.
The use of offsets should be prohibited in all trade arrangements between South Africa and the European Union, including the proposed R30 billion weapons acquisition programme.
Corruption is the antithesis of good governance. It is therefore reprehensible that the European Union, in condoning the use of offsets, is in practice encouraging the spread of corruption in South Africa.
South Africa's Weapons Procurement Programme
The Government Procurement Programme (GPA) between the European Union, the United States, Canada, Norway, Japan, Switzerland, Israel and South Korea prohibits the use of offsets on trade in civil goods, eg aircraft. The US Department of Commerce has proposed a US/EU agreement to prohibit offsets on all trade including armaments because of American concern about the negative effects of offsets in the American economy. (1)
The European Union's Code of Conduct on Arms Exports requires consideration of socio-economic conditions in recipient countries. Why is Criterion Eight not being applied by European governments given the crises of poverty facing South Africa?
South African church leaders and NGOs are resolutely opposed to the acquisition programme. There is no foreign military threat to South Africa to warrant expenditure of R30 billion on warplanes and warships. The threat to South Africa's security is poverty.
About 40 percent of South Africans are unemployed. Eight million South Africans live in shacks. Crime is out-of-control. The illiteracy rate is 60 percent. The majority of South Africans live on less than R3 500 per annum. Teachers and nurses are being retrenched. The government pleads there is no money, yet there is R30 billion apparently available for new weapons from the European Union countries of Britain, Germany, Sweden and Italy.
Supposedly overriding the socio-economic objections to this expenditure on weapons are vague and unsubstantiated prospects of offsets worth R110 billion to create 65 000 jobs. The use of offsets has become widespread in the international armaments industry as a lure to promote weapons exports to "Third World" countries which otherwise could not afford them.
Under the guise of commercial confidentiality, the South African public is not permitted details of the offset arrangements. It is evident however, that while taxpayers will be liable for the expenditures, the "benefits" will accrue instead to the armaments industry and private sector.
Academic studies show that the "only function which offsets provide for recipient countries is to provide political legitimisation for the large outlays by allowing policy-makers to point to apparent but ultimately non-existent, economic benefits." (2)
There is no rational explanation for the acquisitions themselves or the offsets, except for the probability of corruption. Anglican Archbishop Njongonkulu Ndungane, Pan Africanist Congress Member of Parliament Patricia de Lille and the Coalition for Defence Alternatives have independently but publicly called for a judicial commission of inquiry to investigate the weapons procurement programme. (3)
Both the United States and European Union object to the use of offsets in civil international trade both because of distortions to trading patterns and because of the prospect of corruption. Unfortunately, the armaments industry has so far been exempted from the general prohibition of this malpractice.
It is highly regrettable that the European Union condones the use of offsets in the sales of armaments to South Africa by Germany, the United Kingdom, Sweden and Italy -- all member states of the European Union. This submission therefore requests that the South Africa-European Union trade agreements promote international "best practice" by prohibiting the use of offsets in all trade including weapons.
The armaments industry is heavily subsidised in all countries. The rationale of exports is to reduce the unit costs of equipment required by the armed forces of the supplier countries. Offsets lead to the proliferation of weaponry, thus greatly increasingly the risks of war. It is also increasingly evident that they are a scam by the armaments industry, with the connivance of politicians, to fleece the taxpayers of both supplier and recipient countries.
The issue at stake is that of corruption, a practice which is rampant within the international armaments industry. The Swedish Bofors artillery exports to India during the 1980s brought down a former Indian government. The Agusta-Dassault Affair highlighted bribes paid to the former Secretary-General of NATO and Belgian political parties. The Pergau dam, Matrix Churchill and Al Yamamah affairs brought attention to the widespread corruption in the British armaments industry.
The Cameron Commission of Inquiry into Armscor and the Truth and Reconciliation Commission have both found that incompetence and corruption were rife within South Africa's armaments industry.
Corruption, while prevalent in developed countries too, is particularly harmful in developing countries which tend to have fewer resources to address the problem -- which are now wasted or not used in the most effective or equitable way. Corruption impacts severely on human security. It threatens: economic growth; efficiency and social development; creates significantly higher levels of risk and uncertainty in economic transactions; distorts public expenditure in that it diverts scarce resources to lesser or non-priorities; acts as a disincentive, possibly deterring prospective economic activities and investment; and stifles private initiative and enterprise. Corruption thus becomes both the cause and consequence of underdevelopment and poverty in general.
Politically, corruption is often a consequence of the unaccountable monopoly of power of authoritarian and totalitarian regimes. Where representative processes to enforce governmental accountability are weak or non-existent, political structures provide the greatest opportunities for corruption. These exist where there is an absence of political mechanisms through which a government that tolerates, condones or participates in rent-seeking and corrupt practices, might be dismissed. The political impact is such that an electorate's perception of widespread corruption may eat away at the popular legitimacy and trust of the government. Corruption is the antithesis of good governance. (4)
The President of the World Bank has recently stated that poverty is not diminishing, and that corruption lies at the core of the problem. The Secretary-General of the United Nations has similarly declared that corruption has critically hobbled and skewed Africa's development. (5) Transparency International reports that many European countries have in the past condoned bribery by their multinational corporations, and that such payments were even tax-deductible. (6)
The European armaments industry uses offsets and the lure of job creation and foreign exchange to sell its weapons. What politician in South Africa, a country desperate for jobs, can pass up on the promises of job creation?
Turkey, Saudi Arabia, the United Arab Emirates and now South Africa have endeavoured to use the leverage of government procurement for industrial development. And the European armaments industry flatters our government bureaucrats into believing that they are tough negotiators.
The £20 billion Al Yamamah deal between Britain and Saudi Arabia was supposed to create 75 000 jobs in Saudi Arabia. Now that deal is virtually complete, it transpires that it resulted not in 75 000 jobs but only 1 600. Of the 1 600 jobs, only 300 low/medium tech jobs were for Saudi citizens. The rest were filled by imported expatriates. (7)
Turkey, Saudi Arabia and the United Arab Emirates are internationally notorious for their scale of corruption related to weapons acquisitions. Is South Africa to emulate their example? What hope for democracy in this country under such circumstances?
Armscor and the Department of Trade and Industry are the major promoters in South Africa of the malpractice of offsets. The DTI announced in 1997 that all government foreign tenders exceeding US$10 million must comply with the Industrial Participation Programme. The purpose was said to be to "fast track investment, exports and technology development by utilising the instrument of government procurement to leverage such initiatives."
South Africa's "industrial participation obligation must not result in an increase in the price of the purchase." So declares principle number one of the DTI guidelines. International experience indicates that "any costs incurred by arms companies as a result of offset deals negotiated on defence sales are simply passed onto the recipient, and the level of job creation and technology transfer…is generally minimal." (8)
The increase in prices to compensate for offsets is borne out by the UAE experience in purchasing Lockheed-Martin F-16 fighter aircraft from the United States. A benchmark price for an F-16 is US$25 million: the UAE is paying US$75 million per plane. (9)
Sweden has been quoting Chile SEK 285 million per BAe/Saab Gripen fighter aircraft, the Philippines SEK 280 million and Brazil SEK 180 million. A benchmark price in Sweden per Gripen is SEK 260 million or US$32 million. South Africa is being charged SEK 535 million (US$65 million) per Gripen. This is more than double the US$32 million benchmark price, thus negating the first principle of the DTI's industrial participation programme. (10)
The notion that DTI can leverage expenditure of R10,875 billion on BAe/Saab Gripen fighter aircraft into offsets worth R48,313 billion to create 23 195 jobs is economically absurd. Indeed, Saab's Vice President for Communications was quoted in the Swedish newspaper Finanstidningen on June 9, 1999 as saying: "the South Africans do not understand their own model -- there is a great intellectual problem. Those who decide cannot follow in the maze of figures." (11)
The list of prospective offset projects released on September 15, 1999 by the Government Communication Information Service (GCIS) is vague and unsubstantiated. Regarding the Swedish involvement relating to the BAe/Saab Gripen purchases, there are 21 proposals:
A South African railway bogie will be marketed in Sweden by Saab and SJ International.
Volvo will access some of its auto components in South Africa.
MIAB was to set up a manufacturing facility in Hungary for climatic control components. Instead, the factory will be established in South Africa, with production to commence in late 1999.
Swedefish will assist with agric-fishing technology in South Africa,
Saab will procure furniture from South Africa for world distribution. Unmentioned, but presumably through Ikea.
ABB Installation and Materials will establish a production facility for low voltage circuit breakers and market them worldwide.
Saab employees will be encouraged to visit South Africa as tourists.
Atlas Copco will expand its South African operations.
Radius Scada will produce remote control systems for electricity, gas and water distribution.
Electrolux will manufacture floor care products in South Africa.
ABB Powertech will manufacture capacitators in South Africa.
BAe/Saab to expand plastic injection moulding capacity at the South African company, Irenco.
Powertech to promote South African technology internationally for prepaid electricity.
Saab to access some of its auto components from South Africa.
ABB JV Conlog Solar -- joint venture with Conlog to produce pre-payment electric meters through magnetic smart cards.
Lesjofors Springs will improve spring technology in South Africa, and promote exports.
ABB SA will procure components such as transformers, powerlines, switchgear, substations from South Africa, and will provide training and education courses.
BIM Kemi and Sasol in joint venture to manufacture AKD wax from carbon monoxide.
Itochu will source from South Africa for large instrastructure projects.
Unnamed Saab or Volvo: transfer of design and production of vehicles from an overseas location plant. Investment will be "substantial" but no figures or details given.
Establishment of a plant to manufacture titanium dioxide pigment, but partners still not found. (12)
Even in the highly unlikely event that these investments were to materialise, there is no reason -- if they are economically viable -- why they should be conditional on weapons sales. Nor is there any monitoring mechanism to ensure compliance.
Germany intends to supply four frigates and three submarines for R11 billion. Note that the corvettes, which by definition are warships of between 600 and 2000 tons, have been upgraded to frigates of 3 284 tons. There is no foreign naval threat to South Africa. Only the United States even has the capacity to send a naval expedition this far.
We at the Coalition for Defence Alternatives listened in disbelief and amazement when we heard senior naval personnel tell the Parliamentary Defence Review that "submarines are the ultimate stealth weapons to protect fish." Parliament was also told that submarines make a small navy important so, that in the unlikely event of invasion by the United States, we should at least be able to give the Americans a bloody nose.
Such logic for spending R11 billion of taxpayers' money is childish. Yet even the Minister of Defence has been prompted to declare that the vessels would be used to "protect South Africa's marine resources against poaching and pollution, law enforcement at sea with respect to [sic] piracy and the smuggling of drugs, weapons and other contraband." (13)
Such collateral uses of warships are totally inappropriate and ineffective. Should South Africa's resources require protection, marine protection vessels crewed by specialist personnel (and combined with satellite surveillance) would be both more effective and very considerably cheaper than warships.
The German offset proposals focus on the construction of a deep water harbour at Coega outside Port Elizabeth and establishment of a high-technology stainless steel plant. The steel plant would generate 3 000 jobs during construction and 1 000 permanent jobs once production begins. These figures fall very far short of announcements in November 1998 that the submarine programme would generate industrial offsets worth R30,274 billion and create 16 251 jobs.
The Coega scheme to build a deep water harbour in the Eastern Cape has been opposed by environmentalists for many years. Numerous reports have expressed concern about air pollution, and the consequences for the citrus and tourism industries. In addition, the resident population of Coega of about 2 000 people would have to be removed from their land. (14)
The proposal to build a metallurgical centre around the stainless steel plant adds dramatically to those concerns. What are the water implications of a metallurgical centre for existing communities and agriculture in an area which is chronically drought-stricken? Will be existing harbour in Port Elizabeth be abandoned? Does South Africa actually need another deep water harbour?
South Africa already has one stainless steel producer, Columbus Steel at Middleburg which is operating at severe losses. Columbus Steel has an annual capacity of 600 000 tons compared with South African domestic consumption of 100 000 tons. A second stainless steel plant at Coega producing 800 000 tons would depend totally on glutted export markets.
Stainless steel production is highly capital intensive rather than labour intensive, and requires skilled labour. The proposed Coega plant will therefore make virtually no contribution to the unemployment crisis in the Eastern Cape. Indeed, it is probable that some of the skilled personnel may be imported expatriates.
It is also increasingly evident that the Department of Trade and Industry offset programme is promoting energy-heavy industrialisation, and that the environmental safeguards will fall far below European standards. This is a continuation of apartheid-era economic policies, which resulted in Mossgas, Sasol, Atlantis Diesel Engines, Armscor/Denel and other economically-unviable projects.
Subsidies paid to maintain these "white elephant" projects divert public resources away from socio-economic needs for education, housing and health services.
In 1994/1995 the South African Navy proposed to buy four Spanish corvettes at a cost of R1,7 billion (compared now with four German frigates for R6 billion). The proposal was suspended in June 1995 because of public opposition. In return for the purchase of R1,7 billion, the Spaniards were to provide offsets worth R4,8 billion which would create
23 000 jobs. Not surprisingly, neither Armscor nor the SA Navy was able to quantify their formulae.
In addition to increasing Spanish purchases of coal, the proposals focussed on the development of South Africa's fishing industry amongst underpriviledged communities. Essentially, Spain proposed to build 30 fishing trawlers and to fund them with low interest foreign currency loans. They would also build two massive fish processing factories on the Cape West coast, and guaranteed to buy the throughput for export to Spain.
Fishing industry analysis of the proposals calculated that the annual harvest of hake required by the two factories would have to increase from 140 000 tons to 250 000 tons. The consequence of such overfishing would have been the final collapse of South Africa's fishing industry, which employs about 85 000 people. (16)
Only very narrowly and because of public protest did South Africa again a four year respite from the Spanish corvette proposals, and the 23 000 jobs they were supposed to create. The case illustrates however, the unintended consequences of offset proposals promoted by bureaucrats at Armscor and the Department of Trade and Industry.
The Apollo Sea which sank in June 1994 off Saldanha causing massive oil pollution in the Western Cape was reportedly carrying iron ore as part of an Armscor offset transaction with China. The public has never been permitted to know the details of that, or other Armscor transactions.
The United States maintained its arms embargo against South Africa until 1998 -- four years after the lifting of the United Nations arms embargo -- because of a court case in Philadelphia against Armscor. There were 67 counts against Armscor, including the pirating of American missile technology for sale to Iraq and China. Armscor also imported AK-47s from Norinco in China to deliver to Renamo in Mozambique as part of the apartheid government's deliberate destabilisation of neighbouring states.
It was Armscor's attempt to dispose of some of these AK-47s to Yemen, a country then suffering civil war, which led to the Cameron Commission of Inquiry of 1994/1995.
The Coalition for Defence Alternatives has consistently argued at the Parliamentary Defence Review and elsewhere that given South Africa's socio-economic circumstances, the country simply cannot afford to expend its resources on weaponry. The proposition that expenditure of R30 billion on weaponry will generate offsets worth up to R110 billion is an endeavour by the military establishment to by-pass that reality.
Even the military establishment concedes that there is no foreign military threat to South Africa. The very real threat to the country's security and its recent transition to democracy are however, the crises of poverty. These must be redressed as a matter of national priority. Issues of human security relating to people must take priority over traditional notions of military security relating to states. The South African constitution quite clearly gives priority to human security when it declares (section 198) that:
national security must reflect the resolve of South Africans, as individuals and
as a nation, to live as equals, to live in peace and harmony, to be free from fear and
want and to seek a better life.
The offset proposals remain vague and unsubstantiated. What few jobs might eventuate will be skilled jobs, which will do nothing for the unemployment crisis amongst unskilled people. Indeed, a dangerous consequence would be further widening of the gap between rich and poor.
There is no rational explanation for either the acquisitions themselves or the offsets, except for the probability of corruption. Anglican Archbishop Njongonkulu Ndungane, Pan Africanist Congress Member of Parliament Patricia de Lille and the Coalition for Defence Alternatives have independently but publicly called for a judicial commission to investigate the weapons procurement programme.
We have been advised that a motion before the Swedish Parliament would investigate the contradictions of Sweden's commitments to the alleviation of poverty against the sale of weapons to countries such as South Africa.
We realise that whilst it is one thing to "smell corruption," it is extremely difficult to prove -- hence the need for specialists to investigate the probability. This organisation has received information that payments were made to trade union officials to gain their support for the British Aerospace/Saab Gripen transactions. Our British associates have forwarded that information to the British government, which has now instructed the British police to investigate the allegations.
Some researchers at an ANC think-tank, which specialises in defence issues, have recently released a memorandum alleging widespread corruption relating to the R30 billion acquisition programme. The involvement of British Aerospace is also prominent amongst their allegations.
The British government in September 1997 committed itself not to provide export credits for armaments exports to highly indebted poor countries. Although South Africa is not amongst the poorest countries, the poverty of the majority of South Africans calls into question the role of the British government in promoting weapons exports to this country.
The present British government came to office pledging itself to an "ethical foreign policy" on issues of weapons exports. Despite the socio-economic crises facing South Africa, the British government's Export Credit Guarantee Department proposes to guarantee approximately 85 percent of the British components of the acquisition programme. Funding for the British and Swedish suppliers will come from Barclays Bank. The German suppliers will be financed by Commerzbank. (17)
The Coalition for Defence Alternatives has made a submission to the Export Credit Guarantee Department requesting it to refuse to underwrite the sale of British Aerospace Hawk and British Aerospace/Saab JAS 39 Gripen fighter aircraft.
The British government has persisted with exports of armaments to Indonesia despite lobbying by NGOs and evidence that British Aerospace Hawks were being used in the suppression of East Timor. Indonesia has recently defaulted on £130 millions worth of Hawk fighter aircraft, but given ECGD guarantees it is the British taxpayer, rather than British Aerospace, who will "foot the bill."
Terry Crawford-Browne
October 15, 1999
Neil Cooper, "Arms Sales and Nano-Ethics: New Labour in Office," University of Plymouth, England, September 1999.
Neil Cooper, "South African Offsets," University of Plymouth, England, November 1998.
Press statements, August and September 1999.
Report on "Pugwash Symposium on Human Security in the Southern African Context," Midrand, June 1998.
Business Report, October 11, 1999.
Business Report, October 13, 1999.
Ron Matthews, "Arms Trade, Security and Conflict," University of Middlesex, England, June 1999.
Neil Cooper, "South African Offsets," University of Plymouth, England, November 1998.
Jane's Defence Weekly, May 26, 1999.
Kristna Fredsrorelsen, Stockholm, January 1999.
Finanstidningen, June 9, 1999.
Media Briefing on Strategic Defence Package, GCIS, September 15, 1999.
Business Day, September 17, 1999.
Southern Africa Environment Project, "Proposed Ngqura (Coega) Development," March 29, 1999.
Volksblad, June 15, 1999.
Eckhart Kramer, South African Deep Sea Trawling Industry Association.
Media Briefing on Strategic Defence Package, GCIS, September 15, 1999.
Appendix 2: ECONOMISTS ALLIED FOR ARMS REDUCTION E C A A R South Africa's R30 billion Weapons Procurement Programme: OFFSETS, an invitation to corruptionin a country desperate for socio-economic development
Supplier Product Cost (rm) Offsets (rm) Jobs Germany 4 frigates 6 001 16 007 10 153
Germany 3 subs. 5 212 30 274 16 251
UK 4 helicopters 787 2 720 2 536*
Italy40 helicopters 2 168 4 685 4 558*
Sweden/UK 28 Gripens 10 875 48 313 23 195 UK 24 Hawks 4 728 8 580 7 472 29 771 110 579 64 165
source: Business Day, November 19, 1998
* dropped September 15, 1999, and reduced from 40 to 30 helicopters
May 26, 2000
CHURCH LEADERS and non-governmental organisations in South Africa have repeatedly expressed their opposition to the government's intention to spend R30 billion on warships, warplanes and helicopters from Germany, Sweden, Britain and Italy. (1)
They argue that there is no foreign military threat against South Africa to warrant such expenditure, and that issues of poverty which face South Africa require financial priority. Despite numerous submissions and statements by representatives of civil society, the government approved the rearmament programme in December 1999 and the Minister of Finance signed the financial guarantees in February 2000. (2)
The Cabinet had earlier appointed Jayendra Naidoo -- a former trade unionist and chairperson of Nedlac -- to counter criticisms of the expenditure. His brief was to make the acquisitions programme "affordable," and to negotiate offsets from the armaments manufacturers. (3) These were publicly promoted as being worth R110 billion which would create 64 165 jobs. Although massive taxpayer funding was involved, the public was specifically precluded from details of the offsets under contractual "commercial confidentiality" clauses. (4)
Although prohibited in civil trade agreements between NAFTA and the European Union in terms of the Government Procurement Agreement, offsets have become a feature of the international armaments industry which has so far managed to negotiate an exemption. (5) South Africa's Department of Trade and Industry has required offsets since 1997 in terms of its Industrial Participation Programme for all government acquisition projects worth over US$10 million. (6)
During Swedish Prime Minister Goran Persson's visit to South Africa in November 1999, his advisor Roger Hallhag admitted that offsets are internationally discredited precisely because they are so open to corruption. Hallhag justified the use of offsets in the weapons procurements programme, saying that "lower standards apply in third world countries!" (7)
It is extraordinary that such a discredited malpractice is promoted by South Africa's Department of Trade and Industry, and is now obligatory government policy. International experience is that "the only function which offsets perform for the recipients is to provide political legitimisation for the large outlays required on modern defence systems by allowing policy-makers to point to apparent, but ultimately non-existent, economic benefits that can be derived." (8)
In 1994/95 the South African Navy had proposed to buy four Spanish corvettes at a cost of R1.7 billion (compared now with four German frigates for R6 billion). The proposal was suspended in June 1995 because of public outcry. In return for the purchase for R1.7 billion, the Spaniards were to provide offsets worth R4.8 billion which, it was declared, would create 23 000 jobs. (9)
In addition to increasing Spanish purchases of coal, the proposals focussed on the development of South Africa's fishing industry amongst underprivileged communities. Essentially, Spain proposed to build 30 fishing trawlers and to fund them with low-interest foreign currency loans. They would also build two massive fish processing factories on the Cape West coast, and guaranteed to buy the throughout for export to Spain.
Fishing industry analysis of the proposals calculated that the annual harvest of hake required by the two factories would have to increase from 140 000 tons to 250 000 tons. The consequence of such overfishing would have been the final collapse of South Africa's fishing industry which employs about 85 000 people. (10)
Only very narrowly and because of public protest did South Africa gain a respite from the Spanish corvette proposals, and the 23 000 jobs that they were supposed to create. The case illustrates however, the unintended consequences of offsets promoted by securocrats at Armscor and bureaucrats at the Department of Trade and Industry.
South Africa's naval rearmament programme is premised upon a need to deter attack by the United States. No other country even has the capacity, let alone an intention, to mount a naval attack upon South Africa. Submarines, it is argued, make a small navy important. The Parliamentary Joint Standing Committee on Defence was told "South Africa should at least have the ability to give the Americans a bloody nose." (11)
That such arguments are childish and absurd does not seem to have occurred to parliamentarians and cabinet ministers who rubberstamped the acquisition programme. A secondary argument is that the warships would protect South Africa's fishing resources from foreign poachers. The fishing industry denies that foreign poaching is even a significant problem, and suggests that most poaching is for crayfish and perlemoen where submarines and frigates would end up literally "on the rocks."
Accordingly, the only rational explanation for the R30 billion acquisition programme is corruption, and the opportunities for enrichment afforded by the secrecy of the process.
The German armaments industry used the opportunity of the suspension of the acquisition programme in 1995 to promote German frigates and submarines. Deputy President Thabo Mbeki announced after establishment of the German-South African Binational Commission that Germany's tender would be reconsidered. During a private visit to South Africa in early 1996, a former German ambassador informed the writer that the German government was determined at all costs to win the contract. (12)
Given the corruption scandal involving former Chancellor Helmut Kohl and the German armaments industry, it becomes imperative to investigate why the South African government ultimately accepted the very considerably more expensive German tender.
The German offset proposals focus upon construction of a deep water harbour at Coega outside Port Elizabeth and establishment of a high-technology stainless steel plant. It was announced in November 1998 that the submarine programme would generate industrial offsets worth R30.274 billion and create 16 251 jobs. (13) It is now evident that these projections were grossly inflated. It is highly unlikely that the stainless steel plant will be financially viable. If even built, it is likely to require heavy subsidies from South African taxpayers, thus diverting resources away from other priorities. Various analyses indicate that Coega is both an environmental and financial disaster-in-the-making. (14)
The German proposals are apparently linked through BMW to Tony Georgiades -- a Greek shipowner who was reportedly active in oil and armaments sanctions-busting during the apartheid era, and whose former wife Elita is now married to former President FW de Klerk. The former Minister of Defence, Joe Modise, is alleged to have been paid R10 million for his signature to the submarine agreements.
Although the naval "platforms" for the frigates and submarines are to be of German origin, the French company Thomson CSF will be responsible for the combat suites of high-tech armaments and electronics systems. A primary beneficiary of these contracts will be African Defence Systems, whose directors include Lambert Moloi (of Denel and MK) and Shabier Shaikh (brother of the director general of the acquisitions programme, Chippy Shaikh). (15)
The Swedish government has heavily promoted the sale of BAe/Saab JAS39 Gripen fighter aircraft. South Africa is the first (and only) export market for this politically and financially embarrassing project. (16) The government intends to purchase 28 of these aircraft at a cost of R10.875 billion. The offsets have been calculated as worth R48.313 billion, and as creating
23 195 jobs. Many of a prospective list of 21 projects appear to be connected to Billy Rautenbach's now-bankrupt Wheels for Africa organisation, which was reportedly linked to the Zimbabwe government's involvement in the Democratic Republic of Congo on behalf of President Kabila. (17)
Information received from within Saab in Sweden has indicated that South Africa is being very substantially overcharged for the aircraft in order to compensate for the costs of the offsets. (18) Referring to Jayendra Naidoo, Saab's Vice President for Communications was quoted in the Swedish newspaper Finanstidningen on June 9, 1999 as saying: "South Africans do not understand their own model -- there is a great intellectual problem. Those who decide cannot follow in the maze of figures." (19)
In promoting the use of offsets, the armaments industry invariably emphasises the job creation and foreign exchange earnings that will result from weapons acquisitions. The £20 billion Al Yamamah deal between Britain and Saudi Arabia was supposed to create 75 000 jobs in Saudi Arabia. In practice only 1 600 jobs resulted, of which 300 were filled by Saudis and the rest by imported expatriates. (20)
It has become increasingly evident that offsets are a scam by the armaments industry, with connivance of politicians, to fleece the taxpayers of both supplier and recipient countries. In the event that Indonesia, Zimbabwe (or South Africa?) defaults on payments for British weapons exports, it is the British taxpayers, not the suppliers, who bear the costs. (21)
The proliferation of armaments in "third world" countries (and the wars that almost inevitably follow) is a consequence of heavy government-to-government marketing. During British Prime Minister Tony Blair's visit to South Africa in January 1999, he was informed that church leaders and NGOs were resolutely opposed to the government's acquisition programme. He was also requested to apply Criterion Eight of the European Union's Code of Conduct on Arms Exports, which requires consideration of the socio-economic conditions in recipient countries. (22) A response from the British High Commission on Mr Blair's behalf argued that the offsets would promote South Africa's economic development. (23)
The Campaign Against Arms Trade in London has objected to the sale of BAe Hawk fighter trainer aircraft to South Africa, and has made representations to British ministers including Peter Hain, Stephen Byers and Claire Short. (24) The Export Credit Guarantee Department which underwrites British armaments exports has been informed that should corruption allegations be proved, the underlying contracts would be deemed fraudulent and should therefore be repudiated. (25) Similarly, German church leaders have been asked to make that point to the German credit agency, Hermes.
Although church leaders and NGOs opposed to the acquisition programme have focussed upon the socio-economic crises facing South Africa, they have also been acutely aware of the armaments industry's reputation for corruption. Only in the United States and Canada is it illegal to bribe foreign officials in order to secure armaments export contracts.
The writer was approached by ANC intelligence operatives in mid 1999 on behalf of disaffected ANC MPs with information about high-ranking officials and politicians -- primarily ex members of Umkonto we Sizwe (the ANC's military wing) -- who would benefit from cross-directorships and shareholdings related to the acquisition programme.
The ANC government's response to the preliminary allegations was to mount a witchhunt for the whistleblowers. There was quite evidently no interest to investigate, but only to cover up and punish the dissidents. A consequence of the ANC's list system was that dissident MPs were silenced by the party whips. The Minister of Defence even went as far as to "lean upon" both Archbishop Njongonkulu Ndungane to reveal the identities of the whistleblowers who, understandably, went to ground.
Evidence of corruption then came pouring in. Recognising that the Coalition for Defence Alternatives was not competent to judge the authenticity of the allegations, the evidence was forwarded through Patricia de Lille, Pan Africanist Congress MP to the Heath Investigation Unit in November 1999. (26) A finding was to have been made by end January 2000.
Judge Heath's investigation has been thwarted by the refusal of the President's Office to process 127 outstanding applications for promulgation of official investigations into general allegations of corruption. (27) The Heath unit's informal investigations have however, apparently corroborated the allegations of the intelligence operatives regarding the R30 billion weapons acquisition project and its related offsets. The names of Jayendra Naidoo and Chippy Schaikh are prominent in the documentation of allegations. (28) Judge Heath is understood to consider the case against Naidoo and Shaikh to be "watertight." It is regrettable that the names of some prominent politicians implicated in the scandals may have to be concealed.
Closely intertwined in terms of directorships and beneficiaries is the tender for South Africa's third cellphone network, CellC which, despite allegations of massive irregularities, has been provisionally awarded to a Saudi-funded consortium. (29) Denel has been suffering massive financial losses, and pins its hopes for survival upon the acquisition programme and a prospective R7 billion export deal with Saudi Arabia for G6 155mm artillery. LIW, the division which produces the G6, is being sold to Thomson CSF which will then "pick the cherries" out of Denel.
Saudi Arabia provided much of the ANC's campaign funding through the facilitation of Muslim Indian South Africans, including the Shaikh family and Yusef Surtee. Their influence is said to extend to the President's Office.
The scale of corruption that presently permeates South Africa calls into question the government's actual commitment to an "economic renaissance." There is much rhetoric, but virtually no action as illustrated by the Heath Unit's pending 127 cases. President Mbeki's credibility is at stake, and his tenure in office is already questioned because of the failure of his administration to deliver socio-economic expectations. The World Economic Forum will hold its Tenth Southern African Economic Summit conference in Durban during June 21-23, 2000. Its theme is "Africa's Economic Renaissance -- Making It Happen!"
Six years after the transition to democracy, the government's economic policies are in shreds. GEAR has not only failed to produce jobs but, instead, has resulted in horrendous job losses. South Africa has suffered massive capital outflows, most notably by its own corporations including Old Mutual and Anglo-American. The rand has collapsed against both the dollar and the currencies of the European Union. Crime and the paralysis of the judicial system deter both domestic and foreign investment. Eight million South Africans live in shacks. Education and health services are in shambles. The HIV/Aids pandemic will have disastrous economic consequences.
Time and time again South African interests are accused of exacerbating conflicts in Africa through exports of armaments; most recently, through purchases by De Beers of Angolan and Sierra Leonean diamonds.
An annual economic growth rate of 6-8 percent is required to begin to address the poverty which afflicts the majority of South Africans. Instead, growth in GDP during the first quarter of 2000 was a feeble 0.9 percent. South Africa has been one of the world's economic disaster stories over the past 30 years. For the vast majority of South Africans, nothing has changed with the transition to democracy.
The question arises how long can South Africa's new and still fragile democracy survive? Corruption impacts severely upon economic growth, efficiency and social development. It creates significantly higher risks and uncertainty in economic transactions, and distorts public expenditure by diverting financial resources to lesser or non-priorities.
Given the socio-economic crises which face South Africa, the government's intention to spend R30 billion on armaments -- despite the repeated objections by representatives of civil society -- destroys the hopes and expectations back in 1994 of an African renaissance in the 21st century.
tscb May 26, 2000
Most recently, joint statement by the SA Council of Churches and the Swedish Christian Council, November 16, 1999. Also Coalition for Defence Alternatives letter to President Thabo Mbeki, March 16, 2000.
Cape Times, February 23, 2000.
Meeting with J. Naidoo, June 14, 1999.
Media briefing on Strategic Defence Package, GCIS, September 15, 1999.
Cooper, Neil: "Arms Sales and Nano-Ethics: New Labour in Office," University of Plymouth, England, September 1999.
"The National Industrial Participation Programme of the Republic of South Africa," publication by the Department of trade and Industry, 1997.
Swedish-South African Civil Society Encounter, Cape Town, November 24, 1999
Cooper, Neil: "South African Offsets," University of Plymouth, England, November 1998.
Cape Argus, May 3, 1995.
Kramer, Eckhart: South African Deep Sea Trawling Industry Association, 1995.
Public hearing, Parliamentary Joint Standing Committee on Defence, March 1997.
Former Ambassador Stabreit.
Business Day, November 19, 1998.
Financial Mail, July 30, 1999.
Mail and Guardian, May 26, 2000.
Swedish television documentary "Striptease," September 29, 1998.
Financial Mail, May 28, 1999.
Kristna Fredsrorelsen, Stockholm, January 1999.
Finanstidningen, June 9, 1999.
Matthews, Ron: "Arms Trade, Security and Conflict," University of Middlesex, England, June 1999.
The Corner House: "Snouts in the Trough," Export Credit Agencies, Briefing 14, Dorset, England, 1999.
Ecaar-SA letter to Mr Tony Blair, January 7, 1999.
Response from British High Commission, Pretoria, February 4, 1999,
Letter from Mr Peter Hain, British Minister of State, January 26, 2000.
Coalition for Defence Alternatives submission to Export Credit Guarantee Department, London, October 14, 1999.
Press statement, Patricia de Lille MP and 14 NGOs, November 30, 1999.
Cape Times, May 25, 2000.
Cape Times, April 20, 2000.
Mail and Guardian, March 10, 2000.