Disarmament and Defence Industrial Adjustment in South Africa

by Batchelor, Peter; Willett, Susan

• ISBN13: 9780198294139
• ISBN10: 0198294131
• Format: Hardcover
• Copyright: 1998-08-13
• Publisher: Stockholm International Peace Research Institute

Summary

Peter Batchelor and Susan Willett analyze the response of the South African defense industry to drastic cuts in military expenditure and the demilitarization of society brought about by the end of the Cold War, the collapse of Apartheid, and the stabilization of the regional security situation.

Table of Contents

Preface	ix	(1)
Acknowledgements	x	(2)
Acronyms and abbreviations	xii
1. Introduction: militarization, disarmament and demilitarization	1	(23)
I. Methodology	5	(4)
II. The economic effects of military expenditure and defence industrialization	9	(10)
III. A new security agenda	19
Table 1.1 The evolution of the South African arms industry	5
2. Militarization and the development of the arms industry	24	(25)
I. Introduction	24	(1)
II. The origins and development of the arms industry	24	(11)
III. Self-sufficiency	35	(1)
IV. The size and structure of the domestic arms industry	36	(4)
V. The economic significance of the domestic arms industry	40	(8)
VI. Conclusions	48
Table 2.1. Military expenditure and arms production, 1961-89	25
Table 2.2. The distribution of military expenditure by function, 1961-89	26
Table 2.3. Military industrialization: stages of development	27
Table 2.4. Arms production in the national economy, 1961-89	28
Table 2.5. The structure of Armscor, 1989	37
Table 2.6. Armscor assets and employment, 1968-89	38
Table 2.7. The top industrial companies, 1989	39
Table 2.8. Private-sector defence contractors, 1984	40
Table 2.9. Arms industry employment, 1961-89	41
Table 2.10. Arms imports, 1970-89	42
Table 2.11. Arms exports, 1982-89	44
Table 2.12. The trade balance in armaments, 1982-89	45
Table 2.13. Military research and development expenditure, 1977-89	46
Table 2.14. Patenting activity. 1977-89	47
3. The changing strategic, political and economic environment, 1989-94	49	(18)
I. Introduction	49	(1)
II. The changing strategic environment	49	(4)
III. The changing political environment	53	(9)
IV. The changing economic environment	62	(4)
V. Conclusions	66
Table 3.1. Major economic indicators, 1989-94	63
Table 3.2. Public finance, 1989-94	64
4. Defence cuts and disarmament measures, 1989-94	67	(17)
I. Introduction	67	(1)
II. Defence cuts	67	(2)
III. Disarmament measures	69	(3)
IV. The economic impact	72	(8)
V. Defence cuts, arms production and the manufacturing sector	80	(3)
VI. Conclusions	83
Table 4.1. Military expenditure, 1989-94	68
Table 4.2. The distribution of military expenditure by main programmes, 1989-94	69
Table 4.3. The distribution of military expenditure by function, 1989-94	70
Table 4.4. Domestic arms production, 1989-94	72
Table 4.5. Military research and development expenditure, 1989-94	74
Table 4.6. Arms industry employment, 1989-94	75
Table 4.7. Armscor and Denel: distribution of job losses, 1989-92	76
Table 4.8. Armscor: regional distribution of job losses, 1989-92	77
Table 4.9. Regional economic indicators, 1993	78
Table 4.10. Government expenditure by selected functions, 1989-94	79
Table 4.11. The South African arms, trade, 1989-94	80
Table 4.12. Trends in arms production and total manufacturing output, 1989-94	81
Table 4.13. Sales in the electronics sector, 1989-92	82
5. Defence industrial adjustment, 1989-94	84	(29)
I. Introduction	84	(1)
II. Defence industrial adjustment in the public-sector arms industry	84	(17)
III. Defence industrial adjustment in the private-sector arms industry	101	(11)
IV. Conclusions	112
Table 5.1. Armscor procurement expenditure, 1990-94	88
Table 5.2. The South African arms trade, 1989-94	90
Table 5.3. Denel: vulnerability to defence cuts, 1992	91
Table 5.4. Denel arms exports, 1992-93	93
Table 5.5. Denel: turnover, by source, 1992-93	94
Table 5.6. Denel groups: defence share in turnover, 1992-93	96
Table 5.7. Structure of the private-sector arms industry, 1993	102
Table 5.8. Sources of supply for domestic arms procurement, 1992-93	109
6. The changing security environment after 1994	113	(28)
I. Introduction	113	(3)
II. Recasting the security agenda	116	(4)
III. Regional security cooperation	120	(4)
IV. Peacekeeping	124	(1)
V. Arms sales policies	125	(6)
VI. Strategic doctrine	131	(4)
VII. The military backlash	135	(2)
VIII. Implications for the arms industry	137	(2)
IX. A historic compromise	139
Table 6.1. Military expenditure and armed forces in Southern Africa, 1996	123
7. Defence industrial adjustment after 1994	141	(26)
I. Introduction	141	(1)
II. Political and institutional changes in the defence establishment	142	(2)
III. Defence policy and government policy on the arms industry	144	(2)
IV. Arms trade policy and the arms industry	146	(4)
V. Defence budget trends since 1994	150	(4)
VI. Defence industrial adjustment since 1994	154	(12)
VII. Conclusions	166
Table 7.1. Military expenditure, 1989-95	150
Table 7.2. The distribution of military expenditure by function, 1989-95	151
Table 7.3. Military research and development expenditure, 1989-95	152
Table 7.4. Major current procurement projects, 1995	153
Table 7.5. Denel exports, 1992-95	157
Table 7.6. Denel: international joint ventures, 1996	158
Table 7.7. Denel: composition of turnover, 1992-95	159
Table 7.8. Denel: financial performance, 1992-95	160
Table 7.9. Denel and private-sector defence firms: financial performance, 1995	160
Table 7.10. Arms sales and exports, 1992-95	161
Table 7.11. Private-sector international joint ventures, 1996	162
Table 7.12. The South African arms trade, 1989-95	163
Table 7.13. Arms industry employment, 1989-95	164
Table 7.14. The structure of the defence market, 1992-95	165
Table 7.15. The structure of domestic arms procurement, 1992-95	166
Figure 7.1. Department of Defence: organizational structure, 1995	143
8. Strategies for conversion at the national level	167	(24)
I. Introduction	167	(1)
II. The costs of disarmament	167	(3)
III. The peace dividend	170	(1)
IV. Conversion	171	(15)
V. Refocusing R & D	186	(3)
VI. Conclusions	189
Table 8.1. Denel: diversification and conversion efforts	178
Figure 8.1. The costs of disarmament	169
Figure 8.2. Prospects for conversion	179
9. Summary and conclusions	191	(16)
I. Summary	191	(5)
II. Defence industrial policy issues	196	(9)
III. Concluding remarks	205	(2)
Appendix 1. SADF rationalization and restructuring measures	207	(2)
Appendix 2. Armscor organizational structure, 1992-93	209	(1)
Appendix 3. Denel organizational structure and diversification, 1992-93	210	(7)
Appendix 4. Background statistics	217	(6)
Select bibliography	223	(12)
Index	235