Questions about such expenditure are raised against the backdrop of the priorities of poverty alleviation and the need to materially alter the economic legacy of apartheid. They are also set against the broader institutional backdrop of the defence review "update", with its renewed focus on the demands on South Africa for peace support involvement and disaster relief across the continent.

The strategic posture contained in the Defence White Paper and the defence review, and the arms deal that followed it, is clearly confronting new challenges. The airlift procurement decision - the Airbus A400M - is the clearest manifestation to date of this shift in strategic thinking.

With the special defence account consuming on average 35,6 per cent of the defence budget vote - primarily for the arms deal - the government will have to confront key questions about the overall defence strategy and position of the SANDF which will need to be matched with strategic answers that include the requisite division of resources between capital and current expenditure within the overall stretched defence budget.

The arms deal, which currently carries a price tag of R44,8 billion over 12 years, has already started to reveal some of its hidden costs.

The recent budget indicated that agreements with European export credit agencies in relation to the deal are worth more than South Africa's current debt obligations to the World Bank. It is not immediately clear from the budget which financing vehicle was used to purchase the Super Lynx 300 maritime helicopters (an estimated contract cost of approximately R787 million). The four Lynxes were formally purchased towards the end of 2003 - delivery is scheduled for 2007.

In addition, and more controversially, government concluded a further partnership agreement with Airbus Industrie to purchase eight A400M airlift carriers - in pursuance of an increasing African Union-wide peace mandate - with the delivery of the first aircraft expected in 2010. This is at an additional cost of R8 billion over and above the original R44,8 billion.

In this context, and against the backdrop of a near-record current account deficit, questions must be asked about the macro-economic impact of the arms deal on the balance of payments.

Towards the end of 2005, the department of trade and industry (DTI), briefed parliament's portfolio committee on trade and industry on National Industrial Participation (NIP) programme performance. It stated that the overall programme, of which the arms deal forms part, has generated R23 billion (US$3,5 billion) worth of investment and sales credits, with programmes ranging from the local manufacture of galleys for the Airbus A319 and A320 to the production of cockpit modules for the BMW 3-series for export purposes.

The minister of trade and industry has stated that NIP has generated 8 000 new work opportunities and 134 new projects - well short of the much more ambitious arms deal targets! The DTI currently has to monitor US$15 billion worth of NIP obligations (defence and non-defence) all due by 2013 - a near-impossible task given manpower pressures at the DTI and a raft of policy challenges.

There can be no doubt that increased peacekeeping obligations give a different perspective and, perhaps, a resultant desire to shift attention away from the arms deal to new strategic challenges and their funding requirements. But the financial consequences of the arms deal hamstrings any flexibility of focus in responding to new challenges.

As the department of defence conducts the update of the defence review, two key challenges emerge. The first is the need to learn positive lessons from the arms deal process and its aftermath about building societal consensus around potential shared goals - such as AU-wide peacekeeping. The update or a fully-fledged new White Paper process offers a unique opportunity to accomplish exactly that. Societal agreement about the desirability of peacekeeping could be reached via a proper process. The second challenge is to ensure that goals/aims and means meet.

The full version of this article appears in Focus 42 (June 2006). Focus is published by The Helen Suzman Foundation, tel +27 11 880 3352, info@hsf.org.za

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With acknowledgement to Raenette Taljaard and Helen Suzman Foundation.