'Transformation in Global Defence Markets and Industries'NIC/IISS Conference

4-5th November 2000

Leon Engelbrecht
Engelbrecht Associates
Johannesburg
South Africa

http://204.71.60.38/e_research/official_docs/cia/114-500L.E.CIA.pdf

Introduction

Twenty years ago the year 2000 seemed so far away. It came. But who then could have predicted the momentous changes to come? If one had predicted a peaceful end to communism and the demise of Apartheid in South Africa one might well have been accused of wishful thinking. In 1980, when Zimbabwe arose out of the ashes of Rhodesia, all indications were that white minority rule in South Africa would only end after a long and bloody struggle, if at all. To have said otherwise and to have claimed that it would be by a negotiated transfer of power would probably have exposed the analyst to ridicule. Critics would have concluded the prediction was the triumph of hope over experience. Thirty years ago, in 1970, Apartheid South Africa was even more entrenched and was flanked by white-ruled Rhodesia and the Portugese overseas provinces of Angola and Mocambique. All would be around forever, it seemed. It is for this reason that bankers consider looking further in the future than five years risky and looking, say a decade into what is to come, as exceptionally dangerous. In this paper we shall leave the bankers behind to take counsel of their fears while we boldly take a look ten to thirty years into the future of Africa and its people.

Prediction

The South African defence industry is still in a period of decline and could continue on its way to extinction in this period if it does not address three inter-related aspects:

It needs to establish functioning international alliances with the global players or alternatively should capitulate to wholesale buy-out;

It needs to refocus itself on Africa, not the Mid- or Far East and in doing so needs to grow home markets in neighbouring African states such as Botswana, Zimbabwe and Namibia, some of whom have domestic industries of their own, and lastly;

It needs to decide whether it will remain a producer of weapons and systems or whether it will be a regional or continental service and improvement centre with a niche manufacturing ability.

But can industry be expected to make these choices - and if it did, would that guarantee the South African defence-related industry's survival?

Africa is Not a Country

When dealing with Africa, one must guard against taking an unsophisticated view of the continent. This may sound a trite, obvious, comment but in his address to the African Defence Summit 2000, the CEO of the Zimbabwe Defence Industries (ZDI), Col (Retd) Tshinga Dube, told delegates he still often encountered otherwise-informed persons who thought of Africa in simplistic terms. "Too many outsiders see Africa as a country, not a continent peopled by diverse nations."[1] Other speakers have cautioned the same on other platforms. Djibril Diallo, the director of the Division of Public Affairs at the UN Development Programme, in an interview with the IPS wire service in January 2000 warned against using continent-wide averages as they could be misleading because of substantial population and GDP (gross domestic product) differences that exist among the subregions of North Africa, West Africa, Central Africa, East Africa and Southern Africa.[2] Former South African president, Nelson Mandela, his successor, Thabo Mbeki, and other eminent persons have also cautioned the same. The governor of the South African Reserve Bank, Tito Mboweni in June said Afro pessimism and the image of Africa were some of the leading causes of the fall of the Rand, South Africa's currency. He said the wars in Sudan and Sierra Leone, remote as they were, as well as the political instability in Zimbabwe, also impacted on South Africa's economic growth. "The sentiment relates to a large extent to the picture of Africa as a continent on the abyss.... that Africa as a whole was a continent at war."[3] In this regard it must be remember that Africa is geographically massive. Southern Africa, up to the Democratic Republic of the Congo, is said to be the size of mainland China, or alternatively, the size of Europe minus Russia. If events in the Balkans or Baltic normally leave London's markets alone, it can be argued that events north of Equatorial Africa should pass the Johannesburg Stock Exchange by. Regrettably, they do not.

Before taking a closer look at South Africa, its military and its defence-related industry, the condition of the rest of the continent need be considered. It is here that the SANDF will be employed and its is for that its defence-related industry should prepare. The latest edition of the Institute's Military Balance provides a snap-shot. Sub-Saharan Africa accounted for nearly two-thirds of the 100,000 people worldwide killed as a direct result of armed conflict over the year to August 2000, it found. "There has been armed conflict of some form in three-quarters of all countries in the region. Both military and non-military measures have been used in attempts to stabilise these situations. While the arms flow from outside and within the region continues unabated, efforts are being made to restrict funds used to buy weapons and logistic support and to pay militias and other private armed groups. An effort to curb the illegal trade in diamonds, a major source of income for some rebel groups particularly in Sierra Leone and Angola, is being led by Western governments, notably the UK, in partnership with diamond-trading companies. This is unlikely to have a short-term impact on the flow of cheap small arms, but it could significantly influence the calculations of leaders of armed groups who profit most from the diamond trade. War crimes tribunals, such as those established in Rwanda and most recently in Sierra Leone, are another important non-military means of influencing leaders of armed groups.

The suffering and loss of life in the region resulting from armed conflict is serious enough, but disease, in particular Aids, is having an even worse impact. Aids alone accounts for an estimated 6,000 deaths each day and will harm long-term regional economic and political stability," the publication concluded.[4]

The impact of HIV/Aids is indeed frightening. South African defence minister Mosuioa Lekota has said that 17 percent of the SANDF was HIV possitive, based on tests carried out in 1999. He said testing was continuing and he expected the final figure to be lower. He is being overoptimistic. It is highly unlikely that the SANDF's infection rate will be lower that that of the general population. Reports indicate that in Botswana, 36 percent of the adult population is HIV- positive. In Zimbabwe and Swaziland, the infection rate is 25 percent. Lesotho is at 24 percent. In Namibia, South Africa, and Zambia, the figure is 20 percent. In none of these countries has the spread of the virus been checked. Life expectancy, a sentinel indicator of economic progress, is falling precipitously. In Zimbabwe, without Aids, life expectancy in 2010 would be 70 years, but with Aids, it is expected to fall below 35 years. Botswana's life expectancy is projected to fall from 66 years to 33 years by 2010. For South Africa, it will fall from 68 years to 48 years. And for Zambia, from 60 to 30 years. "These life expectancies are more akin to those of the Middle Ages than of the modern age," Lester R Brown, chairman of the Worldwatch Institute, an environmental research group said in late October 2000[5], in a feature article entitled "HIV: Restructuring Africa's population". He continued that the demography of the epidemic was not well understood simply because, in contrast to most infectious diseases, which took their heaviest toll among the elderly and the very young, this virus took its greatest toll among young adults. "The effect on mortality is most easily understood. In the absence of a low-cost cure, infection leads to death. The time from infection until death for adults in Africa is estimated at 7 to 10 years. This means that Botswana can expect to lose the 36 percent of its adult population that is HIV-positive within this decade, plus the additional numbers who will be infected within the next year or two. The HIV toll, plus normal deaths among adults, means that close to half of the adults in Botswana today will be dead by 2010. Other countries with high infection rates, such as South Africa, Swaziland, and Zimbabwe, will likely lose nearly a third of their adults by 2010," he wrote. Adults are not the only ones dying from Aids. In Africa, infants of mothers who are HIV-positive have a 30 to 60 percent chance of being born with the virus. Their life expectancy is typically less than 2 years. Many more infants acquire the virus through breastfeeding. Few of them will reach school age. The effect this will have on African economies and GDPs are clear. Lamentably, little has been done outside Uganda and now Zambia to reverse the tide. South Africa's president Mbeki has also not helped by questioning the link between HIV and Aids.

Mbeki has withdrawn from that debate and is attempting to make a real difference in other areas. In 1998, Mbeki then still deputy to President Mandela, spoke eloquently that a generation of Africans now existed who had seen the worst of its post-colonial dark age. They had seen war, experienced famine, witnessed genocide, had been repressed by brutal military governments and dictators and had been robbed by kleptocrats such as the departed and unlamented former ruler of Zaire, Joseph Mobutu. Mbeki said this generation had learnt from their experiences and were now ready to lead Africa to its reawakening and make the 21st Century the "African Century". He has expounded this project, the African Renaissance, at every opportunity since. In early October 2000 he addressed Nigerian and South African businessmen in Abuja, Nigeria. "I think we will all agree that out of the gloom that has defined our existence for much of the twentieth century, a new era is in the making. This new time, from which will emerge a new African world, must be made by all of us working together," Mbeki said. He continued that this new Africa would have to emerge from the hard work commitment of its people. "To some extent we have to defeat the 'Afro-pessimism that lies at the root of this reluctance to invest in the African economies by demonstrating our own confidence in our economies by using such resources as we have actually to achieve higher rates of economic growth and development." The vehicles for this were properly investing limited domestic savings at home and repatriating stolen resources from abroad. Efforts to retrieve the ill-gotten wealth of former Nigerian strongman, General Sani Abacha served as a clear example.[6]

Later that month he addressed church leaders at a conference at Kempton Park, east of Johannesburg in South Africa. "Africa has had enough of wars, military government takeovers, millions of people being uprooted by violence, corruption and poverty... Some of the woes are caused by the people of Africa themselves," said Mbeki, but he also referred to a spirit that he has noticed all over Africa which was causing people to say, "Let us tackle these problems." Referring to his visit to Rwanda earlier that month, he described how residents of that country were taking on the future in a spirit of reconciliation, despite the genocide of 1994 in which approximately one million people were murdered within a hundred days. He also referred to Nigeria's determination to do away with its culture of military governments. Mbeki then appealed to churches in Africa to help make the "African century" a reality. "It is not going to happen by just building a bunch of houses. People's souls need to be addressed so they can take a stand against corruption and violence[7]," he said.

Will the African Renaissance, succeed in the period under consideration? Mbeki is clearly on the right track but his project will take time and HIV/Aids may undo or delay much of its success. His approach, which is to make the bad practices of the past uneconomic as well as morally and socially unacceptable should succeed in the long term. In the period under consideration we can still expect that many African leaders will not to get the message. The idea that the African Renaissance will be bloodless is quaint but wrong. At the start of the European Renaissance there were as many as 500 states and statelets. By the end of that period of European history about fifty remained. The period was defined by the many wars that were fought, not by the economic growth and trade as well as access to resources that variously funded or triggered the conflicts. If one today mainly think of the Renaissance in terms of its magnificent art, one has to remember much of this was funded by nasty dictators and assorted warlords. Those who could not afford the best looted it from those who could. Europe became what it is today when advances in trade and industry made such practices uneconomic and the enlightenment as well as the consequent advance of democracy made war for profit and plunder socially and morally unacceptable. For the present that is not yet the case in Africa. Mbeki also conceded in another of his addresses that many "leaders" exploited ethnicity and religion for political purposes and access to power.[8] On a continent with myriad ethnic groups, porous borders and imposed, often artificial, nation-state superstructures this is and will remain easy to do. Mbeki is right that this "tendency has contributed to the continued strife and disunity as those who felt marginalised by the dominant groups mobilise against their exclusion from political power and access to resources." This will have to be addressed as will the nature of democracy. It is too often viewed as a foreign import. "We must.. create democratic systems appropriate to the African reality," Mbeki says. That will be tough. Political parties, even in South Africa, often tend to be exclusive ethnic and tribal organisations, rather than inclusive communities of like-minded people[9].

On the face of it, it should be a boom-time for arms companies in Africa. For the unscrupulous it is. The flow of arms and ammunition into the region from China, Central Asia and Eastern Europe is well documented, as is the outflow of ivory, illicit drugs, uncut diamonds, rare wood, endangered species and other valuable commodities. The networks and unofficial air routes used for these activities have also been well reported in the mass media and in academic circles.[10]

Most reputable defence manufacturers and marketers steer clear of much of Africa because of public pressure, home government regulation and the unreliability of potential buyers. Simplistically put, many potential arms buyers are seen as beyond the pale in the public eye. Others are the subject of international concern and others might be "non-state actors" (read guerilla or armed opposition groups) for whom end-user certificates are hard to obtain. Home governments generally require the latter before authorising exports. Other considerations also apply. Many US companies believe their State Department and its regulations are a major advantage to their direct competitors in Europe and further east.[11]

Many South African defence executives feel the same about their National Conventional Arms Control Committee (NCACC).[12] Many countries, including South Africa, also ban exports to countries involved in armed conflict in sympathy with the UN Charter's obligation that members to refrain from armed conflict and to engage in the peaceful settlement of disputes. In these countries it has already become unacceptable to export arms to belligerents.[13] Considering the number of conflicts presently raging across the continent, this substantially reduces the number of potential, let alone real, markets. The impoverished nature of many governments, their limited ability to raise funds for arms and the dictates of the international donor and financial community also play a role. Arms are expensive and can generally only be bought "legitimately" in peacetime:- when other priorities prevail. (Arms can of course be bought during conflicts, but generally only from less reputable dealers and manufacturers and at a considerable premium). The World Bank and the International Monetary Fund also generally keep clients under the proverbial thumb and generally prescribe defence spending at 2.4 percent of GDP or less. In many African countries this is such a paltry sum as to make them non-viable markets.

The Transforming Face of African Defence

Africa is free and the colonial era is over. The decades-long struggle against colonial overlords and white minority rule in Rhodesia, Southwest Africa and South Africa has ended. These struggles are often painted in Cold War colours and the superpower influence is undeniable. But, just as there is seldom smoke without fire, the liberation wars were inspired by the legitimate aspirations of Africa's people. It is indeed sad that some of these conflicts continue because of the greed of post-colonial elites.

Now that all of Africa is politically emancipated its military posture is also changing. African militaries have turned their attention and doctrine away from supporting and assisting liberation movements (and guarding against reprisals for doing so) to considering and participating in peace-operations. This is not a universal process as intra-state and inter-state wars are likely to continue for the foreseeable future. Where this refocusing can take place people's armies are professionalising and equipment more suitable for use in the region is being acquired. It is here that viable markets can be sought.

Will these be loose-standing markets or is there also a trend towards "jointness" and "combinedness"? Within the Southern African Development Community (SADC)[14] the sub-regional block to which South Africa belongs, there is. Twelve of the SADC's 14 members contributed to an exercise brigade that was put through its peacekeeping paces at the SA Army Combat Training Centre in the Northern Cape province in April 1999. In 1996 a similar, but smaller, exercise was held in eastern Zimbabwe. Both were not only combined (in other words multinational) but also joint (or multi-Service). Blue Hungwe, in 1996, involved land and air forces along with civilian police. Blue Crane in 1999 added naval elements, including a French and an Indian patrol vessel, to the mix. A plethora of intergovernmental organisations as well as non-governmental organisations also participated. Similar exercises have been held in Central and West Africa, but unlike the SADC exercise, these were built around French RECAMP or American ACRI planning.[15]

This move towards multinational joint operations is already generating strong interest in joint and combined training as well as procurement in the SADC. The already mentioned African Defence Summit certainly set the tone for this. Keynote speaker, Maj Gen Lungile (Chris) Pepani, the SANDF's chief of corporate communications said that in the operational field the concept of jointness would increase efficiency and reduce costs. "This applies within any military organisation and synchronises the actions of the main Services", he said. "Jointness applies on an even wider scale in the field of regional cooperation. With Africa accepting more and more responsibility for its own stability, it is of the utmost importance that the security organisations of the region join forces in harmonising their activities on every level," Pepani said.[16] The Chief Director Strategic Management in the Policy and Planning Division at the Defence Secretariat of the Department of Defence, SAAF Maj Gen Len le Roux amplified. Looking at the primary function of the SANDF, as found in the Constitution, namely defending and protecting the Republic, its territorial integrity and its people Le Roux told the conference this was too restrictive. "The SANDF should be designed to assist in shaping conditions of peace and stability in our region, to dissuade and deter aggression and military or armed adventurism against South Africa or our allies and to fight and win wars when that becomes the only option for ensuring a better peace", he said.[17]

Integration Will Logically Lead to Common Procurement

Colonel Dube told conference goers that "besides meeting the defence requirements for the region, South Africa can also help other SADC members develop their defence industries. In so doing, the regional armies would be equipped with state-of-the-art equipment designed and manufactured in the region for the region", he said. He also found it unsurprising that many of regional armies had spent millions of dollars acquiring sophisticated equipment which when used in the region performed badly, for it was not designed and tested using regional parameters." As a rule the cooling systems of imported vehicles fail in the demanding African bush with its "hot and high" conditions. Dube then went on to call for the consolidation of defence industries in the region. "A mechanism can be put in place whereby industries are set up in countries according to resources available to them. For example an industry to manufacture brass cartridges can be set up in Zambia where there are large reserves of copper, likewise Zimbabwe with plenty of iron and steel coupled with its sophisticated foundries can produce cast products like mortar bombs and artillery shells. Such industries can then supply the whole region for them to be viable. (South Africa) with its technological(ly advanced industry) can co-ordinate the processing of the raw materials in various SADC countries."

Dube continued to say a "Defence Technology Board set up under the SADC's Organ for Politics, Defence and Security, comprising of technocrats in the defence sector to share, disseminate and implement defence projects within the region could be a starting point". This way, a project too expensive or cumbersome for one country can be tackled by the region as a whole. "Failure to utilise regional products may be attributed to lack of trust among member states, sanctions against each other, unwillingness to transfer technology between member states, influence caused by inheritance from colonial powers and the fear of dependance on neighbours", he said. The consequences of importing from outside the region was also severe. First there was the exhaustion of scarce foreign currency, with about 30 percent of the purchase price going to freight charges alone. Next, imports perpetuated the region's lack of technological advancement and high unemployment and kept it dependent on the developed world. "In most cases purchases are done through third parties which tends to increase the value of goods and sometimes result in the wrong equipment being delivered, " Dube said.[18] Armscor, the South African DoD's procurement agency and life-cycle equipment supporter, also expressed itself in favour of regional military-industrialisation, joint regional purchases and standardisation. It is also to start marketing itself as a SADC purchasing agent.

As the African Renaissance unfolds one may argue that the need for armed forces will fall away and with it the need for arms. In consequence, no market for defence products. Quite the contrary. Progress will often be halting and there will be reverses. It is in such circumstances that the more democratically advanced African states will likely militarily intervene or dispatch peacekeepers and peacemakers to restore the status quo ante or to create the conditions for a new beginning. Providing defence products to such states and their militaries will not only be acceptable, but also imperative. Indeed, one can expect public opinion, in many instances to compel governments to supply appropriate products and services or at least to allow industry to do so. As UN Secretary General Kofi Annan said: "You can do a lot with diplomacy, but you can do a lot more with diplomacy backed up by firmness and force." The UN force commander in Sierra Leone would certainly agree.

South Africa: Force Design, Equipment and Acquisitions

South Africa covets a permanent seat on the UN Security Council[19], and is actively promoting the reform of that body with that agenda in mind. It therefore expects and is expected to take a military lead in Africa (particularly in the south and central subregions), in both traditional and the OOTW (operations other than war) mode.

The military implications of this foreign policy objective has started to filter through to the SANDF. General Pepani, elsewhere in his paper at the African Defence Summit said it seemed to him that much of the focus of military activity would now fall on what was traditionally regarded as secondary rather than primary roles. "The emphasis in terms of function has shifted to peace support operations or peace enforcement operations, rescue missions or what was historically termed expeditionary activities by others, and bolstering the South African Police Services in their fight against crime", he said. "The nature of expeditionary operations in Africa places a premium on transport because of the relatively poor infrastructure left by colonialism and dictatorships. This demands operational control of sea and air and assistance may not always be offered by the large, developed, powers," Pepani said.

Le Roux said that the South African defence debate was dominated by "arguments based on the present realities of the pressing need for social spending on such crucial issues as health, education and housing, the unacceptable level of crime and violence in South Africa, the general instability and high level of intra-state conflict in our region and the relative absence of a clearly defined military threat to South Africa in the short to medium term. All these arguments have merit and need to be considered in the final definition of the defence requirements of South Africa, but the defence debate must never lose sight of the enduring role of defence and the long-term nature of defence strategy and planning".

The force design of a defence force is the final expression of its roles, functions and defence posture as determined by the state's political leaders and that military's principals. It will of necessity be driven by needs but will also be constrained by resources. Le Roux said in the South African context emphasis should therefore, shift from heavy, ground mobile forces, to light air- and sea-mobile forces. "There will be a quantitative and qualitative difference between a force design based on conventional defence only, and that which is required for the broader spectrum of the prevention, management and resolution of conflict".

Pepani and Le Roux's comments raises very serious questions about the SANDF's current force design. This design was the outcome of what was called a "very consultative process" (at the time) to draft a Defence White Paper and then to conduct a Defence Review. The former was adopted by Parliament in May 1996 and the latter passed the legislature in April 1998. With hindsight it has become clear that the process had been manipulated. This manipulation and the absence of a clear foreign policy under the Mandela administration[20] resulted in a White Paper and a Defence Review that paid lip service to the SANDF's likely roles and guided force design to the conventional and traditional. Acquisitions are being made accordingly.

It was this defence review that informed the government's strategic rearmament programme.[21]

To summarise, contracts were signed in December 1999 to purchase four Meko A200SAN patrol corvettes for the South African Navy (SAN) from the German Frigate Consortium and three Type 209 1400MOD submarines from the German Submarine Consortium. The SAAF stands to gain 30 Agusta A109M light utility helicopters (with an option for ten more), 24 BAE Systems Hawk lead-in fighter trainers and 28 Saab/BAE Systems Gripen advanced fourth-generation light fighter aircraft.[22]

These are not the only projects underway. Two packages, originally also part of the strategic rearmament programme, remain outstanding. A contract for four maritime helicopters for use on the corvettes was not signed, but GKN Westland remains the preferred bidder with the Super Lynx 300. In August 2000, South Africa's Defence Secretary (the DoD's civilian department head) recommitted the DoD to the deal.

An order for between 95 and 108 main battle tanks (MBTs) never passed Cabinet. The Chief of the DoD's Departmental Acquisition and Procurement Division, Shamin "Chippy" Shaikh, afterwards (1999) said the programme was not put to Cabinet as the Armour Formation could not decide how many tanks they wanted. He said as soon as they did, the programme could go to Cabinet as part of the government-to-government package deal. This may, in the meantime, have changed. His army deputy, Brigadier General Johan Jooste in June 2000 said MBTs, to replace the Army's upgraded Centurions, would likely only be acquired after 2010 - but they will be acquired.

The MBT acquisition is only one of 35 programmes the Army is currently funding. One of the major projects, is the African Warrior. This soldier system programme was launched in 1999 and although not unique in the world, the SANDF is currently the only defence force in a developing country that has such a programme. The idea is that the African Warrior will guide all future acquisition and procurement projects. "for warriors of all services". Unlike many other acquisition projects, African Warrior, which had a R1.5-million budget in 1999, has its eyes firmly on operations in Africa. On the force protection side, it must protect the South African soldier against the full spectrum of natural hazards (disease and animals) as well as battlefield threats (from shrapnel to chemical and biological weapons); while on the force projection side it must allow accurate targeting and engagement of hostile forces among civilians without collateral damage. Armscor says African Warrior will follow "a real systems approach within which equipment and armaments will optimally enhance the impressive capacity of the human being in the complex modern-day battlespace." Project officers say this "system literally starts with the naked human as the basic subsystem adding first the basics like clothing and protection and eventually integrating that with electronic aids and advanced optical and weapons systems.

Other major projects centre on a ground based air defence system (GBADS) for the Army. Phase 1 of the project involves acquiring a man-portable very-short range air defence system (VSHORADS) and appropriate command, control and target acquisition systems. A locally developed SHORADS (short range air defence system) may follow. Like African Warrior, this project is funded and underway. Other urgent and funded projects include a battlefield tractor (in the Supacat class) for the airborne and a 4x4 special forces vehicle. Later this decade the Army would also complete the import and partial local assembly of a series of Spanish heavy trucks. The upgrade of 1,200 Ratel infantry combat vehicles to Ratel 3 standard would also soon be completed, while 44 of the current Centurion MBT fleet would start further optimisation to Olifant Mk1B standard in two years time. Jooste also hoped to acquire a real infantry fighting vehicle for mechanised forces in the second half of the decade to replace the Ratel which would then go to the motorised infantry. The Army believes peace operations as well as expeditionary operations require that troops operate under-armour for force protection where necessary, while a turreted main gun, with proper targeting and acquisition means would also allow for pinpoint fire. The Army also plans to replace its current fleet of armoured personnel carriers after 2004 and has slated a need to replace the SA Military (Samil) range of 2.5-, 5- and 10 -ton utility trucks. In a briefing in June 2000 Jooste said where possible the Army would standardise new acquisitions. Other projects include the G7 105mm towed light gun (currently a technology demonstrator), a 120mm heavy armoured car main gun (for the nominal Rooikat 2 project after 2012), and new ammunition. The justification for the G7 is that the 155mm G5 towed and the G6 self-propelled systems are too heavy to move over strategic distances. This can also be said of the MBTs. An Army source perhaps correctly pointed out that on an unpredictable continent these systems amounted to an insurance policy. "You may never need them, but if you do, and you don't have them you will pay a heavy price," the officer said. Even so, South Africa variously fought Namibian, Angolan and Cuban forces for 22 years before needing MBTs in southeast Angola in 1987-9.

The SAN will receive a return on investment when they the corvettes enter service from 2002 onwards. They have sunk considerable sums of money into the development of a local vertical launch anti-missile and aircraft SHORADS (short range air defence system) for the ships. The Umkhonto is an infra-red naval version of the SA High Velocity (SAHV) missile developed by Kentron. The ships will also carry a Navy funded twin-35mm close-in weapons system fitted for the Swiss AHEAD ammunition range. The optronics was also SAN funded as was the radar guidance systems, developed by Reunert Radar Systems (RRS - 33 percent owned by the European Aerospace and Defence Company, EADS). On the other hand, very few locally developed (and Navy funded) systems developed for use aboard submarines will be fitted to the Type 209's. It appears much of what was developed at high cost was not of international standard. African Defence Systems (ADS), the systems integrator for the corvettes have also controversially selected a French combat suite for the ships' combat information centre over a local system developed by Cape-based CCII - with SAN funds. The chosen suite is manufactured by a subsidiary of Thomson CSF. The developer has complained that ADS itself is a Thomson CSF subsidiary.

The SAN is also funding several projects unrelated to the submarine and corvette programmes. This includes stop gap electronic warfare as well as command and control upgrades for the Warrior-class (Israeli Reshef) fast attack craft (FAC) and Spear-class (French Daphne) submarines. The fleet auxiliary, SAS Outeniqua has also received a make-over and the SAN is investing heavily in new tactical communications systems. The SAN is also keen to acquire another submarine and two more corvettes as well as four or six new fast attack craft (to replace the Warriors, that will remain in service after the arrival of the corvettes) and four minesweepers to replace the geriatric Ton-class. In February 2000 it was reported Germany was to sell the SAN five second-hand Class 351 vessels.

The SAAF as well is supporting a number of projects in support of its acquisitions. Many are weapons projects such as the Denel-Kentron developed Torgos, an air-launched stand-off cruise missile. These missiles will become increasingly important in the period under consideration. Cruise missiles, whether fibre-optic guided or not, can hit targets accurately at medium to long distances with minimum exposure to the user. They also have limited battle damage and intelligence gathering means. It can be expected that the SAN and SA Army will also adopt such systems. The SAN will likely also obtain land-attack missiles for its corvettes. Whether these will be based on the MM40 Exocet remains to be seen. Unmanned aerial vehicles will play a growing role for the same reason. The R-Darter air-to-air missile (also from the Denel-Kentron stable) was recently taken into service as the V4 beyond-visual-range missile. It will arm the Gripen as they come into service. The SAAF is also investing in electronic warfare and command and control. Brigadier General Mario Brazzoli, the Director of the SAAF Command and Control Systems Group says his Service is directing its available resources to improving these systems and ensuring interoperability between sensors, control systems and weapons. The money spent on the SAAF's Air Defence Control Centres (ADCC), that will control the air and ground based air defence fight, will ensure that information can be drawn from every radar in the SAAF and national air traffic control grid and can be passed on to every weapon system now in use or likely to be used. It will also allow the Army's future VHORADS batteries as well as ZSU-23-2 23mm and GDF-005 35mm gun regiments to join in. This approach and the low air threat means the SAAF only has a symbolic GBAD presence in its 120 Squadron. That unit consists of several upgraded Cactus (French Crotale) launchers and a fire control post. Cactus itself is now obsolete as it cannot operate in a modern electronic warfare environment. The launchers have been adapted to accommodate the "highly maneuverable" SAHV technology demonstrators which have an effective range of about 12km.

The above is a general overview of the procurement plans and ambitions of the main Services. There are sound arguments in favour of most of the planned acquisitions, but in the light of Pepani and Le Roux's comments one must challenge some of the rationalisations used. In particular one has to question the need for the Gripen ALFA, the Type 209 submarines and the MBTs in light of the small available budget and the crucial need for real air- and sealift capability. Undoubtedly the Gripen will give the SAAF air superiority if not air supremacy in the region, but for what purpose? South Africa with the open ocean behind it faces economically dependent allied states north of its borders. They are more likely to rely on South Africa for defence than to turn on her with aggression. Very few African air forces have a real combat capability. Using SAAF figures, the SANDF's Chief of Joint Operations, Lt Gen Deon Ferreira in 1999 suggested of the 180 jet fighters in sub-Saharan Africa 70 percent were unserviceable and of the 30 helicopter gunships 60 percent were the same. There is an argument that this could change overnight. Private or government money can always be found to buy aircraft and mercenary pilots to fly them. Both the alliances facing off in the Democratic Republic of the Congo have made use of such means.[23] Reportedly so have both the Eritreans and Ethiopians in their recent border war. An air threat against South Africa or its neighbours might therefore materialise overnight. Even so, one must evaluate whether the Hawks, supported by the SAAF's EW means and deception will not be sufficient to deter or defeat that possibility.

The need for new MBTs arose after Botswana acquired 30 SK105 Kurassier light tanks from Austria and 36 Scorpion reconnaissance vehicles from the UK. The SANDF apparently concluded the SK105s were superior to its upgraded Centurions and wanted Challengers or Leclercs to restore balance. Whatever the merits of this argument it must be asked why Botswana's acquisitions (which included 13 ex-Canadian F5 Freedom Fighters, and 105mm light guns) were seen as a threat. These acquisitions should have been welcomed as they improved the Botswana Defence Force's capabilities and would help defend South Africa and the SADC's open northern borders. At a minimum South Africa's frontier again lies on the Zambezi and failing to plan and equip for defending that land frontier in concert with its northern neighbours from any notional threat may have unfortunate diplomatic and strategic consequences - least of all ostensibly unwanted regional rearmament.

Much can also be said for the SAN's submarine capability. It is the only user of submarines in sub-Saharan Africa. The Navy argues that South Africa essentially has an island economy and is heavily dependent on sea-based trade. It says submarines give the country a valuable deterrent against would-be attackers. Without submarines the SAN would also need a larger surface fleet (about 12 corvettes) and would be unable to train properly for anti-submarine warfare. The country's coastal waters are said to be ideal for submarines and the navy would prefer its submarines dominating those waters than those of another power. These are sound arguments, as is the Navy's observation that the submarines can support covert special forces operations and strategic intelligence collection. But the unanswered question remains: deterrence against whom? Many of the other undoubted advantages of submarines can be adequately replicated by other means, in the African littoral context. It might be wiser, in light of the probable use of the SANDF to invest the money in a proper strategic sealift and actual amphibious capability.[24]

South Africa is a major exporter of raw and processed goods to Asia and Europe. It only has a small merchant fleet, meaning most ships in port are of foreign origin. Those states then have a commercial interest in keeping open the sea lanes. In the unlikely event of a seaborne attack, those states should be called upon to support the SAN. The country has a commercial interest in protecting the fishing grounds in its exclusive economic zone (EEZ). This requires maritime patrol aircraft for the SAAF and corvettes and armed EEZ patrol vessels, not FAC and submarines., for the SAN.

A fleet of four corvettes, six fast attack craft and three submarines, without any coastal defence means, will not stand against a determined aggressor long anyway.

The Regional Defence Industry

Africa's defence industry is small and is largely concentrated in South Africa and Egypt. Smaller centres exist in Zimbabwe, Namibia, Tanzania and Kenya.

The modern Egyptian industry seemingly concentrates on the assembly and maintenance of US equipment under strict conditions. This nascent capability may hold a key for the US into Africa. While US helicopters and especially the C130/L100 are in widespread use in Africa, export controls and a seeming anti-US bias[25] is preventing its entry into that defence market. Egypt as both an African and an Arab state might be an effective middleman and marketer. The Egyptian minister of state responsible for armaments manufacture visited South Africa in September 2000. It is believed such trans-continental links and cooperation were discussed. Egypt can also become a valuable ally of South Africa by marketing and selling its goods in Arab North Africa and south Asia, where South Africans are often at a considerable cultural and political disadvantage.[26]

In the period leading up to the adoption of the White Paper on Defence and the Defence Review a vigorous debate raged in South Africa about the nature and place of the post-Apartheid military and defence industry. The debate did not die away and is now resurfacing as a result of the persistent allegations of impropriety surrounding the strategic rearmament programme and the Auditor General's report. At the time of signature of the contracts in December 1999 the price was "a steal" at R32-billion (about 3.2 billion pounds sterling) with massive offsets (above R100-billion) and job-creation (65 000 "new" employment opportunities).[27] It now seems likely the cost will be at least R43-billion and perhaps even as much as R60-billion.[28]

In the mid-1990s the consensus was that South Africa needed a defence force. That consensus still stands. The mood over the fate of the defence industry was more ambivalent. The industry had acquired a bad name domestically through illegal imports ("sanction busting"), dodgy exports (for example the export of small arms to the Hutu government in Rwanda in the months before the genocide there) and the realisation by way of the Truth and Reconciliation Commission of how base the industry had been (in particular in its chemical and biological warfare research and development which included tests on live subjects in neighbouring countries as well as the provision of poisons and illegal drugs, such as ecstacy - along with delivery means - to the military and police for use against anti-Apartheid activists). The mood was eventually defused by the catchphrase that no defence industry actually meant no defence force. The latter without the former was said to be impossible, especially as one of the principles underlying the White Paper was that the "SANDF be a balanced, modern, affordable and technologically advanced military force, capable of executing its tasks effectively and efficiently."[29]

South Africa developed a large and sophisticated defence industry in the 1970s and 1980s in the face of increasingly rigorous international sanctions and embargoes, culminating in a mandatory UN arms embargo in 1977. The embargo substantially strengthened the local industry - but at a huge cost. It sheltered the South African defence industry from competition, leading to bloated bureaucracies, massive over-pricing, research and development of products at government cost but without proper authorisation, kick-backs and other forms of corruption. The prevailing positive attitude towards acquiring defence technology through illegal means, such as espionage, theft and smuggling, did not help matters and did the country a great disservice.[30] For reasons of national pride it is still not acknowledged how much of the industry's "domestic" products were in fact imports. The G5 and G6 155mm artillery systems use barrels and extended-range full bore ammunition developed by the late maverick Canadian scientist, Dr Gerald Bull. He passed on the same technology to Austria and a number of other countries. He was allegedly assassinated by the Israelis after developing the Iraqi "supergun". Many of Denel-Kentron's projects bear an Israeli stamp. The Skerpioen(Scorpion) missile fitted to the SAN's FACs are license-manufactured Gabriel II's and the ZT3 anti-tank missile, in SA Armoured Corps service was derived from the Israeli version of the US TOW.[31]

When the War for Namibia ended in 1989 and it dawned the next year that Apartheid South Africa would end with negotiation not civil war government priorities changed and the opportunity for massive profit on a captive domestic market fell away. A period of drift set in. Defence projects were cut, delayed or cancelled. The defence budget shrank more than 60 percent in real terms between 1989 and 1998.[32] The 1998 defence budget was $1.9 billion, or 1.4 percent of the Gross Domestic Product, compared with 4.1 percent in 1989.

As it has been put, the industry was thanked for its efforts and told to enter international markets and sink or swim on profits made there.[33] Exceptions aside, such efforts were generally not successful. Over-optimistic of their chances of success and brash to the point of arrogance, South Africa's arms salesman found it difficult to compete. Coming from over-ranked bureaucracies, they had too little clout and made contact with prospective clients at too low a level. They also found it difficult to match American political patronage and French economic assistance. Highly qualified marketers often knew little about the products they were selling and engineers knowledgeable on the specifics of the product could not explain how it would be put to use. A poor comparison with the United Kingdom where industry often make use of serving soldiers through Deso - the Defence Exports Services Organisation. As a result many small and medium sized companies went out of business and many others converted to civilian production. The larger companies also started reducing their dependence on the defense market and endeavoured to sell off their defence business. Even the state-owned Denel group started reducing its dependence on the defence market.

Another consequence was the emigration of South African defence workers and the erosion of South Africa's leading edge. For example, two former Reumech OMC officials now working for the Australian Defence Industries (ADI) took with them the "secret" of the V-shaped mine-protected vehicle hull.[34] ADI's Bushmaster Infantry Mobility Vehicle incorporates this technology and beat the then-still Reumech OMC in its bid to supply its Cobra for the Australian Army's IMV requirement.

The drift ended partly with the release of the White Paper on South Africa's Defence Related Industries[35] in December 1999[36] and partly with the start of defence-industrial offsets related to the strategic rearmament programme. The highlight of the Paper was its integration of all procedures and processes regarding arms control" and its addressing of the current situation with its "fragmentary legislation and resultant structures".[37] South Africa is also to tighten up control over end-user certificates. "Even if there is the slightest possibility that a country would not honour the end-user certificate it provided and re-export the arms, South Africa would not export to that country", Asmal said.[38] The Paper also called for the establishment of a "dedicated defence technology organisation to coordinate and integrate defence research in the public, private and academic sectors, with the specific objective of retaining and enhancing certain specified strategic defence technologies".

These were identified as :

• Logistic and maintenance support; and
• Integrating, adapting and modifying equipment bought on the open market to provide a combat advantage.
• Technologies key to this were:- System integration;
• Command, control and communication means;
• Sensors and data processing;
• Electronic warfare as well as "strategic and tactical electronics"; and
• Combat systems software, including simulation and war-gaming.

These technologies and capabilities would enjoy a "limited amount of protectionism" and subsidisation by government. Shaikh in an November 1999 interview with the author said these elements alone made up roughly 40 percent of the through-life costs of systems. Not only would control over these aspects give South Africa a self-sufficient mid-life upgrade capability, but it would also keep a significant portion of the money spent on an arms programme in the country- without having to accept R&D and production risks for the primary equipment. The document also encourages outside investment in the local industry. Joint ventures are especially favoured, particularly if black empowerment partners are involved. BAE Systems has already gone this route. Where buy-ins take place, government would also like to see empowerment partners. Thomson-CSF achieved this by selling ten percent of ADS to such a grouping, while keeping the other 90. In all instances substantial technology transfer will be promoted. Although the White Paper must still be approved by Parliament, it is unlikely the country will again endeavour to build attack helicopters or other major systems. As illustrated by the strategic rearmament packages, it is simpler to purchase these on the open market and customise them for local conditions or fit them out with South African systems.

Less than a year after signing the contracts for the packages making up the programme, the South African industry is already feeling the benefits. Allied to continuing buy-ins by international players, prospects are improving. ADS, traditionally South Africa's third-largest private defence contractor and systems integrator -and now perhaps its largest-, is a full subsidiary of the French Thomson-CSF group. Reunert, long the country's largest private-sector contractor in October 1999 halved its exposure by selling Reumech, its mechanical manufacturing divisions to Vickers Defence Systems (VDS) for $514 million and a contingent liability. Regional Director John Muston said VDS needed to enter the lucrative wheeled armoured vehicle market: "There were two ways of doing it. We could develop our own vehicles -an expensive prospect- or we could buy such a business from a willing seller." Reunert, a major electronics and electrics corporation has held on to most its defence electronics division, Reutech, though this has not precluded it from selling off part of its radar division to Dasa, now EADS, as mentioned earlier. That tie up has given Reunert access to German R&D and funding, as well as to EADS's undoubted marketing expertise and markets and in turn has helped the Euro-giant win the contract to supply tracking radars for the South African corvettes. The radars will be supplied via Reunert Radar Systems at a cost of R250 million. Reunert has sold ten percent of Reutech to Khorong Investment Holdings, thereby giving the business black empowerment credentials, an increasingly important consideration. Khorong also holds a 30 percent shareholding in RRS.

Sweden has bought into the local industry as well. CelsiusTech (now Saab Technologies) holds a 49 percent stake in Grintek Avitronics. The other 51 percent is held by Grintek, in which the black empowerment grouping Kunene Technologies Limited has a 40 percent stake. Other Grintek businesses also have Euro joint venture ties. Grintek Comms, the radio manufacturer, developed the Phoenix family of HF radios in conjunction with Dasa (now EADS) and Grintek Systems Technologies recently changed its name to Grintek Ewation, to link itself closer to its EADS ally of the same name. The companies reportedly [39] believe that by co-branding on both the corporate and product level their combined "mind and market share" will be greater than the sum of the two. Through their common international trademark Monitoring, Reconnaissance, Counter Measures (MRCM) they field a full range of SIGINT technologies.

BAE Systems is exceptionally active in the local industry. Together with Saab, the company will be plowing over R3.5 billion into the industry as defence industrial offset for the purchase of the Hawk and Gripen at a cost of R15.7 billion. Its non-defence industrial offset comes to R50-billion ($7.2 billion) and will consist of third party economic investment and technology transfer as well as counter purchases. The first of these was announced during African Aerospace and Defence 2000 show, and involved the export of 97 tons of bolts (worth R67 million) to the company's UK supplier of fasteners. Around R3.8 billion of the amount will be offset in this way. BAE Systems was also confirmed in October 2000 as the preferred bidder for an equity stake in Denel's aerospace and ordnance divisions.[40] It was previously said the stake in the aerospace division would be 20 percent. The October announcement placed that in doubt, saying the size of the stake was to be negotiated. BAE Systems has meanwhile made other acquisitions. It owns all of Paradigm Systems Technology, a small aerospace engineering and logistics management company. It also holds a 20 percent share in Advanced Technologies and Engineering (ATE), an avionics supplier and manufacturer of unmanned aerial vehicles. ATE is responsible for providing the avionics for the twelve Rooivalk attack helicopters currently in production for the SAAF. They are also a major contractor in the upgrading of the Spanish Mirage F1 fleet, ironically no longer in SAAF service. Upgrading the French fighters might have made the purchase of Gripen unnecessary, freeing up resources for perhaps more critical purchases. Public Enterprises Minister Jeff Radebe also named two other equity partners for Denel. Franco-Italian Snecma-Turbomeca was selected as the equity partner for Denel Aviation's Airmotive business unit and and British pyrotechnics manufacturer Pains Wessex Defence for Denel's Swartklip subsidiary.

In addition to buying into the local industry, EADS, Thomson-CSF and BAE Systems have also established their African offices in Pretoria. The country is therefore already becoming key in these players' plans for Africa. The South African companies they now own or have interests in can only benefit from this. These companies have already seen an improvement in expertise since the appointment of expatriate specialists and the purge of local deadwood.[41] Russia is also establishing alliances in South Africa aimed at the rest of the continent. Speaking at AAD 2000 former South African defence minister Joe Modise said co-operation would make local products more sellable. His company, Marvotech, was formed jointly by Armscor and Russia's Marvol Group to "promote and develop Russo-South African defence related systems and solutions." The joint venture has consultancy agreements with PromExport, giving it access to Mig MAPO, Klimov, and the Vympel Design Bureau. Locally, Marvotech has arrangements with Denel, Aerosud, ATE and Xcel (a logistics solutions company). Co-operation to date has already produced the SMR95 turbojet engine, a modification to the RD33 fitted to the MiG-29. The SMR95 is intended for the upgrading of Mirage F1 and III fighters as well as MiG-21's. Modise said the engine successfully passed bench and flight tests on the Super Mirage F1 and the Super Cheetah D2 in the mid-1990's. When fitted, the engine gave both aircraft 16 percent more thrust and reduced fuel consumption by 25 percent. The aircraft can also be adapted to carry the Russian P73 IR-guided air-to-air missile, reportedly one of that country's latest designs and the first with a combined "aerogasdynamic" control.[42] These improvements can also be retrofitted to Russian-made aircraft already in service in Africa.

The strategic rearmament programme is expected to generate investment worth at least R104 billion of which R14.5 billion will be in the form of South African production participation, technology transfers and licensing over an 11 year period. [43] This investment aspect was indeed the primary driver behind the purchases. Re-equipping the SANDF came a poor second. But the Auditor General's office , a statutory Parliamentary watchdog, is unconvinced the investment will necessarily materialise[44] and it remains unclear whether the 11 years will merely be a thunderstorm in the desert (whatever its intensity) or a real change in climate.[45]

This lack of clarity aside, business has been brisk. In late October 2000 BAE Systems took delivery of the first of 46 tail assemblies constructed by Denel Aviation for the Hawk T Mk1, in production for the Royal Air Force. The order is part of BAE's offset. Denel has also been contracted to participate in the Airbus, Eurofighter and Nimrod programmes and is already providing parts for the British next generation regional airliner, the Avro RJX. In the same month the state-controlled South African Airways gave BAE Systems a R30 million to supply its 21 new Boeing 737-800 aircraft with cockpit-mounted head-up displays. Denel Aviation's Airmotive business unit is also doing well on offset-related gearbox orders. During AAD 2000 it signed a manufacturing agreement with General Electric Aircraft Engines. In terms of the agreement Denel will manufacture auxiliary gearboxes and power take-off assemblies for GE's CF34 engine. Denel expects to manufacture 1,850 sets over the next five to seven years, to a total value of $90 million (about R630-million). The agreement flowed from GE's obligations as the provider of gas turbine engines for the Meko corvettes and licensing Volvo to manufacture engines for the Gripen ALFA. A similar agreement exists with Rolls Royce in connection with its engines as fitted to the Hawk LIFTs.[46] Arrangements such as these caused Denel acting chief executive Flip Botha to enthuse that the loss-making group was on the way to recovery. "We have really turned the tide," he told reporters in September.[47] Releasing Denel's results, he said the company's gross revenue had increased by 20 percent in the past financial year. The previous year's net loss of R745-million has been cut to R206-million through rising exports to Europe and Asia, as well as stringent cost cutting. Denel's gross income in the year ending March 31, 2000, amounted to R3396-million, compared to R2836-million in the previous year. Exports rose from R1003-million in 1998/99 to R1269-million in the past financial year. "Significant gains were made in the United Kingdom, and business in Asian countries continued to grow", Botha said. The company expected to break even in the new financial year and to start making a profit in 2001/2.

The Namibian defence industry is minute and concentrated in the Windhoeker Maschinen Fabrik, purchased by the government in 1998. The company developed the Wolf-series of armoured personnel carriers for the notorious "Koevoet" counter-insurgency unit of the South African Police (SAP), later transferred to the Southwest African Police (SWAPOL). The vehicle is similar, but heavier, than the South African Casspir range. Both the Casspir and the Wolf remain in Namibian Defence Force and police service. (The Wolf has also been sold to the DRC in limited numbers.) It is slowly being joined by the new Wer'wolf APC, some of which have already seen action in the DRC. The Wer'wolf is smaller than the Wolf and modular in design, meaning a range of rear compartments or flatbeds can be fitted. The vehicle is currently being marketed worldwide by Military International Limited (MIL) of Canada.[48] The rest of the NSDF's equipment is a mixture of South African and East-block equipment inherited from their 1966-1989 liberation struggle, with a number of new purchases for the country's coast guard and air wing. South Africa also donated 24 World War Two-vintage 150mm (5.5-inch) field guns, prime movers, spares and ammunition to Namibia in 1998.

Zimbabwe's defence-related industries were also created in the face of international sanctions, this time in the 1960's and 1970's following a Unilateral Declaration of Independence by the white minority rulers of the then British colony of Rhodesia. As is the case in South Africa, only a small part of the Zimbabwean defence industry is specialised. The country has a high-quality and truly competitive textile industry which also manufactures the Zimbabwean military and police's uniforms and tentage. As a matter of interest, these camouflage uniforms are identical to those worn by the former Rhodesian security forces. Apparently a thriving market exists for these uniforms in the US where they are sold as the latter! Some years ago the Chinese helped build Zimbabwe facilities for lights arms manufacture. The country now manufactures a full range of small arms ammunition as well as 60mm and 82mm mortar tubes and bombs. It can also manufacture and refurbish East Block small-arms, such as the AK47/AKM family.

As can be seen, these industries are by all accounts small. Botswana is credited with a maintenance and limited repair capability. Tanzania also has a Chinese-manufacture arms and ammunition plant and Kenya has a military textile industry as well as repair and maintenance facilities. Their production capacity and the glut of East Block light arms into Africa in the 1970s, 1980s and 1990s means that few if any African states require such arms in the near future. Africa is also already self-sufficient in military clothing, tentage and personal load-bearing equipment. But as Dube indicated, Zimbabwe, like most other African states were reliant on non-African sources for military vehicles and trucks and much else. In light of the likely role of the SANDF, as explained by Pepani and Le Roux, as well as the certainty that these expeditionary and peace operations will be carried out in conjunction with regional/SADC allies (and probably also outside forces, probably from the P3 states[49]) it is imperative that these forces be standardised or at least achieve equipment commonality and interoperability. Though at a low state of readiness and preparedness[50], the SANDF has much its neighbours and allies lack. This includes logistics systems, training means and C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance) capacity. All of these are essential for combined and joint operations. Global players as well as industries based in South Africa are well placed to supply these to such forces.

Conclusion

The NIP and DIP offsets related to the strategic rearmament packages and subsequent purchases are meant to put the defence-related industry back on track - along the path chosen by the defence related industry White Paper. The industry (local as well as foreign-owned/controlled) is also well placed to develop home markets in neighbouring states as part of -and in furtherance of- the African Renaissance. But the window of opportunity is starting to close. Mine-protected vehicles were long a South African niche. Now Namibia is actively marketing a rival product as will Australia, in due course. Other niches, such as artillery, will also gradually fade and defence electronics will increasingly rely on foreign R&D input and funds. This will gradually reduce South Africa to a sales and service centre, with a local-assembly capability.

But the "ability to buy" is also being eroded - in South Africa and elsewhere on the continent. HIV/Aids and its consequences will steadily reduce African GDPs on the one hand and eat up more and more government funds on the other - reducing the already limited ability of African militaries to match their requirements.

In the end this scourge may well undo all the good done by the offsets (assuming they even materialise) and wreck prospects for peace and arms sales to the north. Should this be the case, the questions raised at the beginning of this paper become irrelevant and the industry non-viable. Should the impact of HIV/Aids be limited by prudent government, industry and public action (alas, little sign of that happening), the South African defence-ralated industry may well prosper and grow into a Southern African defence-related industry supllying first the sub-region and then the rest of the Continent. But that will require the offsets materialising as expected (unlikely) and the White Paper being implemented. This may not be universally welcomed. The future of the industry therefore remains bleak - at best.

[1] Conference Paper, African Defence Summit 2000, Gallagher Estate, Midrand, 14-15 August 2000. See also Defence Systems Daily (DSD), www.defence-data.com/africa2000/pageafa06.htm.

[2] Sapa-IPS, Despite grim statistics, Africa makes some progress", United Nations, New York, 19 January 2000.

[3] Sapa "Afro pessimism major cause of Rand depreciation: Mboweni", Durban, 8 June 2000.

[4] IISS, Military Balance 2000-2001, OUP, London, 2000.

[5] The Associated Press, 30 October 2000.

[6] President Thabo Mbeki, Address delivered to the Nigerian and South African Business Forum at the International Conference centre, Abuja, Nigeria on 2 October 2000.

[7] Beeld, Johannesburg, "Mbeki addresses church leaders", 26 October 2000.

[8] President Thabo Mbeki, Address delivered to the Nigerian Institute of International Affairs, Abuja, Nigeria on 3 October 2000.

[9] This was the justification used to outlaw political parties in Uganda. In South Africa, the Inkatha Freedom Party is a mainly-Zulu party while the ANC draws heavily on the Xhosa community, so much so that some speak of a "Xhosa-Nostra". Both parties are ideologically committed to non-racialism, however.

[10] See for example Jakkie Cilliers and Peggy Mason (eds) Peace, Profit or Plunder?, The Privatisation of Security in War-Torn African Societies, Institute for Security Studies, Pretoria, 1999. The book takes a close look at the money-politics behind the wars in Sierra Leone and Angola, with specific reference to "blood diamonds."

[11] See Micool Brooke, "Market Turnaround, Malaysia Aims for Self-Reliance in Arms", Armed Forces Journal International, April 2000. A number of US aerospace companies were reportedly hoping for a review of the State Department's restrictions on transfers of high-technology weapons to customers around the world. "They say that Russia, which has supplied more than 500 upgraded MiG-21s, MiG-29s, Su-27s, and Su-30s to Asian countries during the past decade, is one of the largest beneficiaries of current US export-control restrictions," the article said. It also said restrictions on the sale of AIM-120 Advanced Medium-range Air-to-Air Missiles (AMRAAMs) would soon be lifted, "as a result of Russia recently supplying R-77s (AA-12 'Adders') to Malaysia. That deal introduced beyond-visual-range (BVR) missiles to the region."

[12] This was the feeling of a number of executives interviewed by the author during the African Aerospace and Defence show at Waterkloof AFB, Pretoria, in September 2000.

[13] The flak the British government drew in January 2000 for supplying spare parts for Hawk aircraft in Zimbabwe Air Force service is a case in point. Several British and South African newspapers condemned the move as flying in the face of te UK's "ethical foreign policy" that intended to deny arms exports to countries engaged in external aggression or internal repression. The papers believed Zimbabwe qualified on both grounds.

[14] The SADC consists of South Africa, Lesotho, Swaziland, Namibia, Botswana, Zimbabwe, Mozambique, Malawi, Zambia, Angola, the Democratic Republic of the Congo, Tanzania, the Seychelles and Mauritius. The latter two are island groups in the Indian Ocean.

[15] The African Crisis Response Initiative (ACRI) as well as the French RECAMP form part of so-called "P3 initiative". The P3, that is the US, Britain and France are aiming at improving African peacekeeping abilities in an effort to make the continent more self-reliant. Opinion is divided on the utility of this. Recent ACRI exercises include a brigade-level exercise in Senegal in September 2000 under the auspices of the US European Command and an unrelated medical exercise in Mauritania, also in West Africa, in September. In January this year eight central African armed forces participated in a French-sponsored RECAMP exercise in Gabon. Eight NATO members provided logistics and support. (See DSD, 21 January 2000, www.defence-data.com/archive/page6302.htm for more on RECAMP. Readers interested in the ACRI exercises can find more on www.defenselink.mil, the US armed services website.)

[16] Conference Paper, African Defence Summit 2000, Gallagher Estate, Midrand, 14-15 August 2000. See also DSD, 4 September 2000, www.defence-data.com/africa2000/pageafa06.htm.

[17] Conference Paper, African Defence Summit 2000, Gallagher Estate, Midrand, 14-15 August 2000. See also DSD, 4 September 2000, www.defence-data.com/africa2000/pageafa06.htm

[18] Conference Paper, African Defence Summit 2000, Gallagher Estate, Midrand, 14-15 August 2000. See also DSD, 4 September 2000, www.defence-data.com/africa2000/pageafa06.htm

[19] Business Day, Johannesburg, "South Africa will act for Africa", 8 September 2000.

[20] South Africa's foreign policy can be described as "fuzzy" at best. While there was a deluge of White Papers on Parliament, none was forthcoming from the Department of Foreign Affairs (DFA). The central tenets of South Africa's foreign policy are well known, as is the country's desire to hold a chair on a reformed UN Security Council. But what does "promoting human rights", "building democracy" and exporting South Africa's model of non-violent conflict resolution mean in real terms? The fact that Mandela frequently took a personal hand in foreign affairs (often without consulting the DFA) and that his foreign minister, Alfred Nzo, was rather somnolent, did not help.

[21] The programme goes by several names. The term "strategic rearmament programme" is used throughout for consistency.

[22] The Hawks and Gripens are to be purchased in two tranches. First, 12 Hawks and nine two-seater Gripen trainers and then another 12 Hawks and 19 single-seat Gripens. The contracts allow South Africa to withdraw from the purchase of the second tranches without cost to itself, should its economy or governmental finances take a sudden turn for the worst.

[23] Militarily supporting the DRC government of President Laurent Kabila with is Zimbabwe, Namibia, Angola, and previously, Chad. Supporting the various anti-Kabila insurgent movements is Uganda, Rwanda and allegedly Burundi. Rwanda supports the Goma-faction of the Rally for Congolese Democracy (RCD), with Uganda supporting the Kisangani-faction as will as the Movement for the Liberation of the Congo, the MLC. Several armed "guerilla" forces, operating in the rear of the anti-Kabila insurgents are also in loose alliance with Kabila. They include the Mai-Mai and the remnants of the Interhamwe, the genocidal butchers of Rwanda in 1994. The Angolan rebel movement, Unita, which has rear-bases in the DRC dating back to the Mobutu era, is also said to be in loose alliance with Uganda, something Kampala vehemently denies.

[24] South Africa presently has no amphibious shipping and no dedicated marine troops. A brigade-strength Marine Corps was disbanded in the early 1990s for financial reasons. South Africa's Parachute Regiment has a nominal amphibious ability based on its equipment scales and occasional amphibious training. The SAN's two combat support ships are credited with a very limited and temporary sealift and amphibious capability. Considering the frequency and size of rivers northwards, combined with the already mentioned poor infrastructure there, this lack of capacity is disquieting.

[25] Based at face value on perceptions of the US and its policies as well as its reputed unreliability as an arms provider. US policies are often interpreted as "imperialist" or "neo-colonial" for reasons of domestic consumption or because of genuine misunderstanding of the American agenda. It unreliability as a provider stems from the many strings attached to US purchases and through-life service support. The fact that Washington often cuts or delays aid as well as equipment and spare parts delivery to influence events makes the US an unattractive option to egocentric countries and leaders who place a premium on "self-determination".

[26] One South African defence company made a Christmas gift of some lovely Cape wines to the Egyptian military attache some two years ago. Elementary research would have revealed that the attache, as a strict Moslem, neither celebrated Christmas nor consumed wine. The bemused attache gave away the wine. The company would have been better served to present a more acceptable gift during the Eid festivals.

[27] Government Communications and Information System (GCIS) Press Release (PR), 16 September 2000. The figures were first flighted at the Dexsa 98 show, where the preferred bidders for the eventual contracts were announced. Several economists notable Terry Crawford-Browne of Economists Allied for Arms reduction disagree. In a letter to the South African Parliament in October 2000 he called the figures "a massive international swindle" and "scam". (See Defence Systems Daily, 6 October 2000, at www.defence-data.com/archive/page8684.htm) Main stream economists have also expressed concern at the figures. Independent economist, Mike Schussler, in an interview with the author, referred to the idea of South Africa spending R32 billion to obtain arms and investment worth R104 billion as "voodoo economics". In a main editorial, headed "Pie in the Sky", on 1 November 2000, Business Day, pointed out that of all the potential obstacles to the rosy future for the SA economy sketched by Finance Minister Trevor Manuel that week, one overshadowed all others: the arms procurement package. "Parliament's public accounts committee sounded the alarm in a report released this week, and called for a multipronged forensic investigation into the defence spending programme. Not only is the committee concerned about the major economic risks posed, but it has also raised the problem of possible irregularities in the selection of contractors," the paper said. "But as distasteful as the possible corruption is the way in which taxpayers were hoodwinked about crucial aspects of the package. Government sold it as a lever for job-creating industrial policy. That, increasingly clearly, is the fairy story sceptics suspected it was. In reality, the deal threatens a balance of payments crisis."

[28] See DSD, 6 October 2000, www.defence-data.com/archive/page8684.htm

[29] Defence in a Democracy, White Paper on Defence as approved by Parliament, May 1996, Chapter 1. http://www.cia.gov/nic/pubs/research_supported_by_nic/conference_paper/engelbrecht.htm (21 of 25) [10/11/2002 13:51:20]

[30] Business Day, Johannesburg, "SA listed 34th on Corruption list", 14 September 2000. The international anti-corruption body, Transparency International, has expressed grave concern over levels of corruption found in government, business (public and private sector) and in civil society as a whole. In a debate on restoring the country's moral fibre, in Parliament on 31 October 2000, deputy president Jacob Zuma blamed many of the country's socio-economic ills on moral degeneration. This, he said, was a left-over from the upholding of and reaction to Apartheid. The government encouraged commercial lawlessness to bypass sanctions and the liberation forces encouraged civil disobedience. But the disrespect for some odious laws has gradually become the disrespect for all laws and standards of behaviour.

[31] The role of Bull has been acknowleged in most works dealing with the SA defence-related industry or its products. See for example, The Encyclopeadia of World Military Power, Temple Press/Aerospace, London, 1988. The SAN no longer hides the paternity of the Skerpioen, but Denel has still not come clean on the origin of the ZT3. The author inspected a cut-away missile at an agricultural show in 1992 and noted with interest that some of the electronic components were clearly visible components were labelled "Made in Haifa". There is no city or town with that name in South Africa.

[32] Leon Engelbrecht, "Changing Flags, European Firms Buy Into South Africa's Defence Industry, While American Presence is Curiously Absent, Armed forces Journal International, January 2000.

[33] Leon Engelbrecht, "Changing Flags, European Firms Buy Into South Africa's Defence Industry, While American Presence is Curiously Absent, Armed forces Journal International, January 2000.

[34] Recounted to the author by a reliable South African source later contracted to evaluate and test the vehicle.

[35] The Department of Trade and Industry does not recognise the "defence industry" as an industry. It views companies than manufacture weapons and defence systems as belonging to specialised sectors of industries such as iron-and-steel and electronics. Hence "defence related industries".

[36] The much-anticipated Draft White Paper on Defence Related Industries was released by Education minister Kader Asmal. DSD reported on 20 December 1999 (www.defence-data.com/archive/page6106.htm) that this may sound unusual to ears that do not follow events in South Africa too closely. "But Asmal, the ruling ANC party's resident ethicist and human rights expert, also heads the Cabinet-level interministerial National Conventional Arms Control Committee, or NCACC. It is this committee, rather than the Department of Defence (DoD) or the Department of Trade and Industry (DTI) that stands at the apex of Defence Industrial policy ladder. The South African government considers products that can be loosely described as "defence orientated" needs the most stringent control. As Asmal would likely say, the domestic sale or export of potatoes needs little or no control. But the sale or export of even a single R4 assault rifle or RG31 Nyala APC can cause the country's interests or image much harm. And, indeed, many such instances have occurred. Asmal says weapons and equipment sold in a "totally licentious" manner by the pre-1994 NP (National Party) government are still turning up in various parts of Africa, causing the present government embarrassment. He told the media and foreign military attaches that Apartheid South Africa exported arms worth US$ 100-million to the continent. 'because the then government operated on the principle of the enemy of my enemy is my friend. Some South African weapons ended up in the hands of the Hutu in Rwanda. When those genocidal maniacs were driven out, they left with those arms." It is to prevent this from happening again that the government is committed to 'total political control'over the arms industry." The NCACC consists of the Ministers of Defence; Foreign Affairs; Intelligence; Safety and Security; Arts Culture, Science and Technology; Public Enterprises; Minerals and Energy; Land Affairs and Agriculture; and, Trade and Industry. Three deputy ministers and a number of officials also serve on the 27-member committee. Asmal is chairman. See also www.mil.za/SANDF/DRO/NCACC/ncacc.htm Asmal suffered a major embarrassment in September 2000 when the National Assembly's Parliamentary Portfolio Committee on Defence sent back a draft NCACC Bill, stating it did not incorporate the recommendations of the Cameron Commission of Inquiry into Armscor's prolifigate arms sales in Africa and the Middle East. The Bill must now be accordingly redrafted and will likely return to Parliament in February 2001. [37]. The site says the NCACC secretariat (the Directorate of Conventional Arms Control, located in the DoD) administers the Armaments Development and Production (Armscor) Act of 1968 and the Regulation of Foreign Military Assistance Act of 1998. A separate interdepartmental South African Council for the Non-Proliferation of Weapons of Mass Destruction is supported by the Department of Trade and Industry. It regulates the Non-Proliferation of Weapons of Mass Destruction Act. A Bill to replace the archaic Armscor Act is in preparation. The Bill to turn the NCACC into a statutory body and to repeal the arms control sections of the Armscor Act was rejected by the National Assembly's Portfolio Committee on Defence for lack of completeness. (DSD, 20 October 2000, www.defence-data.com/archive/page8825.htm).

[38] In the late 1990s the Mandela government was embarrassed by reports that APC's exported to Uganda had been re-exported to anti-Khartoum forces in southern Sudan, in contravention of signed end-user certificates.

[39] DSD, 7 September 2000, www.defence-data.com/africa2000/pageafa28.htm

[40] The equity stake and other privatisation drives are vehemently opposed by the ANC government's nominal political allies, the SA Communist Party (SACP) and the Congress of South African Trade Unions (Cosatu). It is likely this as well as the government's free-market economic policies (neo-liberal in Cosatu and SACP-speak) will soon (in the next year) cause the collapse of the decades-old alliance. The implications of this may be less pleasant than it might appear. Cosatu and the SACP form a large part of the ANC's election machinery and could become a strong opposing force. Cosatu's mineworkers affiliate, Numsa (National Union of Metalworkers of South Africa), is determined to preserve jobs in the defence-related industry in order to retain employment for its members. It is currently in dispute with Denel over the possible closure of Vektor, the small-arms manufacturer. Over 1,500 jobs are at stake. BAE Systems'opinion on the closure is not known. Neither is their opinion on the transfer of Denel's R&D/mine-clearing house, Mechem to the government's CSIR (Council for Scientisfic and Industrial Research) for R10-million.

[41] The lack of international market knowledge of certain managers and officials can only be described as astonishing. A likely cause is the low premium they place on professional reading and education. A senior military intelligence officer was surprised earlier this year by the existance of the rank of colonel-general on the Russian rank tables. In May, while a German naval task group was exercising with the SAN at the Overberg Test Range, off the southern Cape coast and conducting missile firings, widespread ignorance existed about the possible closure of a similar US naval range off Puerto Rico. By all reports the Germans, were suitably impressed by the advanced technology of the Overberg facility - which they did not know existed. Armed with this knowledge, the range's owners, Denel, should have been marketing the range as the logical replacement for the US and German navies who may soon be without an Atlantic missile firing range. Examples of this nature are legion.

[42] DSD, 8 September 2000, www.defence-data.com/africa2000/pageafa39.htm

[43 GCIS PR, 16 September 1999.

[44] DSD, 16 October 2000, www.defence-data.com/archive/page8764.htm

[45] The importance of the offsets are further amplified by a legal requirement that any future arms purchases also include NIP and DIP offset.

[46] DSD, 25 February 2000, www.defence-data.com/archive/page6577.htm The article stated that Rolls Royce had moved the manufacturing of its Tay gearboxes to South Africa. Under an US$30-million agreement signed on 24 February, Denel Airmotive would be the only supplier of gearboxes for the Tay engine. The article also said Denel already earned US$8-million a year as the sole source of gearboxes for the RR RB211-535 Trent under a seperate risk and revenue-sharing agreement

[47] DSD, 28 September 2000, www.defence-data.com/archive/page8579.htm.

[48] Armada International, Issue5/2000, Zurich, Switzerland, "The Wer'wolf Doesn't Mine.

[49] Britain, France and the United States

[50] The Interim Report of the Ministerial Commission of Inquiry into Transformation in the Department of Defence, as handed to the Minister of Defence on 17 August 2000 paints a grim picture of transformation in the SANDF. The report, authored by former Free State province director general, Advocate Betheul Setai, Member of Parliament Nocwaca Lamina, retired SADF chief, General Jannie Geldenhuys and Portnet harbour security manager, retired-Colonel Sibusiso Mbongwa, found many structures systems and processes have been put in place but as administrative procedures they could not by themselves correct the lack of a definite and ordered plan of action. Also, a single, integrated, plan to guide the SANDF from where it was to where it wanted to be was lacking. This was leading to frustration in the Services and contributed to the race-motivated shootings of white SANDF members by black members. Three such shootings have taken place in little over a year. In September 1999 a disgruntled lieutenant shot dead several officers and NCOs as well as a civilian woman at 1 SAI Bn at Tempe military base in Bloemfontein in the central Free State province. In July another lieutenant shot dead his company commander at 7SAI Bn at Phalaborwa in the eastern Mpumalanga province. Not long afterwards, in September, a sailor shot dead a naval sub-lieutenant aboard the minesweeper SAS East London in Simon's Town naval base. The report found that transformation and affirmative action within the force created abnormal conditions within the SANDF that could not be met with normal budget allocations, without cutting on essentials such as training, housing and rations thereby raising tension and frustration among members. As a result indiscipline and racism were endemic. The report's drafters also found that deployed troops were poorly supported logistically and often went without food because of incompetence on the part of the responsible officers and NCOs. The bloated size of the SANDF has also not helped. The AG pointed out to Parliament in 2000 that force levels were meant to be at 72,000 in June 1998. In February 2000 it was still over 85,000, largely because of government fears that demobilised soldiers would turn to crime in a country where several major cities and nearly all small towns have a 50 percent unemployment figure.

With acknowledgement to Leon Engelbrecht and Engelbrecht Associates.