No Plane, No Gain?

In one important sense, the government's plan to buy eight Airbus A400M cargo carriers is a step in the right direction. It represents a radical shift from the defence-oriented thinking of the Defence Review of the mid-1990s, which led to the controversial purchase of attack aircraft, corvettes and submarines when South Africa faces no external military threat and is unlikely to do so for the foreseeable future. Gripen fighters are a costly virility symbol; the Airbus military freighters are explicitly intended as logistical backup for South African peacekeeping operations and humanitarian relief in Africa. The key argument for the purchase is that the huge, state-of-the-art aircraft will be able to carry much larger loads over longer distances, and are designed to operate from rudimentary airstrips.

That said, the procurement will not be universally welcomed. Given South Africa's huge socio-economic deficits, there will be justifiable questions about the R8-billion contract price — eight planes will cost the taxpayer twice this year's total expenditure on housing subsidies and six times this year's outlay on land reform. Does a country of intermediate development like South Africa really need the biggest, best and most expensive on offer? The new Hercules C130J, for example, may have less capacity, but its price is less than half of that of its Airbus counterpart. One suspects that the choice embodies a measure of nationalist machismo, similar to the showy overkill inherent in the choice of BAE-Saab's Gripen fighters.

There are further objections. It rankles that one of the Airbus Military consortium members is European Aeronautical and Defence Systems (EADS), whose local subsidiary bribed former African National Congress chief whip Tony Yengeni. And it is worrying that the decision to go for Airbus seems to have been largely motivated by the promise of defence offsets allegedly of benefit to the local aerospace industry, and particularly the ailing Denel. The idea, it appears, is for South Africa to participate in the manufacture of the eight aircraft and any future production. The global tide has turned against "countertrade" for government contracts, because it so rarely delivers and tends to inflate the main contract price. Indeed, the United States is considering banning the practice altogether. But there are other complications in this case. Because of the unrealistically short production deadline — the consortium has offered to have the first plane in the air by 2008 — the government is being pressured to sign by the end of next week or risk losing all industrial benefits. The danger of a hasty, ill-considered decision is that local companies will end up with loss-making sub-contracts, similar to those thrust on it by the last defence procurement.

Even if production is commercially viable, the fact is that the local aerospace industry must be able to compete in the global arms market on its own merits. The temporary life-support system offered by Airbus Military is no long-term answer to the company's woes.

The lesson of the first arms deal is that defence contracts have a way of lashing back and biting governments in the rear end. Obviously, procurement agencies must be able to operate as commercial entities. But it would have been far preferable if they had announced the re-orientation of defence priorities and unveiled their intentions for public debate.

With acknowledgement to the Mail & Guardian.