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"KLEILAT GOOI SAAM MET DIE BRUIN SEUNS":THE POLITICS AND ECONOMICS OF THE ARMAMENTS INDUSTRY IN SOUTH AFRICA

CPlease note: This paper is still a work in progress. In its present form it is more a research agenda than 3 •j.uinf product* Please do not quote or distribute without the author's permission.3

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1. INTRODUCTION

In August 1986. Johan van Vuuren, Chief Executive of Armscorin!nlv»m ^Vlew!d "bOUt hlS upbrir"3ir,g and the background to his A men ' a^ expertise in the armaments industry in SouthArriua, commented:

"My kinderlewe was een van kleilat gooi saam met die bruin seuns en grootword met my ouers se belangsteliings." (1)

rule 1fnn°t th0 brutal nafcure of repressive Nationalist Party for most o t the 50 years since van Vuuren's birth. the apparent continuity in his life would almost be humourous. Todayfnnriaman + with "die bruin seuns" is over thetr.n? * * political and economic power in South Africa, th» tools of his trade include some of the most sophisticated?nter«t= wK aVailable’ a"d the "belangsteliings" orinter_sts which Johan van Vuuren is entrusted to protect art*Africa and lb"" 5UrV1V31 ^ ^ - U p r i s e system" in ’southAfrica and the very security of the Apartheid state.

the aPP0arance that it may be somewhat out of context, the above quotation therefore provides an apt introduction tolaliHrtPter WH1Ch attempts tD briefly map out the integration of political and economic features of the developing armaments industry in Apartheid South Africa.

theSCm n ^ ^ armaments industry in general, presents one ofh fundamen ta1 points of interface between the security

establishment and the business community in South Africa. Th° strategic centrality of the industry in the context of an

,.arr embar,30 and of mass resistance to Apartheid, evident. However, the aspiration to develop a fully self-

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caoabilitv* in *°Phisticated arms productioncu??inn ^ thh Af"ica. has also placed Armscor at theSouth African industr^01091""1 " d — ^P"»nt within

r»l!tion«h?n Hf:atUr\ haS been Premised on an interdependent between Armscor and the private sector. Indeed, keyboast' t h a t l ™ inCl“ding Piet MaraiS ‘A i r m a n ) and van Vuuren,over the ** 3 m°del °f 3uccessful "pri'/atisation"privatisation" nf t-h" YearS °r S° ‘ Thev ar^Lle that the l**tisatxor» °f the arms industry is of fundamental importance

embarnoes°P1[? L r S Sel f"suf f iclencV in the face of international the . These views are reflected in the recommendations ofPlannina ^ f U th. °f Investigation into the FutureMatters On fh- ?friCan Defenl:e Force and Related Armscornatters. On the issue of self-sufficiency;

aollnst^ho1^ 7 Wlth reqard t0 armaments. The arms embargo r n ™ V 15 currentlY implemented by the internationalcommunity to such an extent that it is not envisaged thitfnt 3ble t0 imDort any weapons systems in th»future... The armaments industry is a national asset -o th° RSA, and its survival is of crtical importance. In th-

n ’ tMe m°St cardinal aspect is to ensure sufficiency, and the concern is to preserve the expertise of contractors•M (2)

Two paragraphs futher on, theCommitte mapped out Armscor's particular approach to the issue of privatisation:

Privatisation. The Committee accepts the fact thataimedtlSr i0nH 15 indicative of a broad spectrum of measures aimed at reducing the State's share of the economy. The method employed by Armscor to promote privatisation is toanriOU^nHe PrOV|si°ni"9 bY fche private sector, contracting out and industrial leasing. In addition, no facilities' are created if they already exist in the private sector." (3)

The existence of this "privatised" armaments production capacity th^ ^ analysts such as Ratcliffe and Frankel to describe

South African system as a “military-industrial complex" of one sort or another. (4) In essence these analyses identify the process of militarisation of the South Afncln economy - the

lhPmen ̂ mutually dependent relationships between business and the military reflected by the infusion of strategic concernsa wholS0CUriHy ®stablishm^ t within the South African economy as social 7 a particular response to the developingsociety. P UtlCal and economic crisis within South African

IrmI* iSH a dan<3er of Viewing the development and expansion ofhostilT ?nt10n *•" S?Uth Afrlca as a strategic necessity in a n° ^ ‘ . international environment. However obvious, itthe nr 5 Statln^ that the ^ise of militarism and indeed,growth or arms production in South Africa were internally

geared political responses to a social, political and economic crisis. Furthermore, within this military-industrial collusion, the representatives of capital are also political actors.The responses of businesspeople to these intensifying social, political and economic crisis in South Africa have been varied and often contradictory. Not only at a national level, but at a local level as well, chambers of commerce and industry, financiers and employers' organisations, have been playing a substantially more interventionist role in the politics of the country. Their responses to the crisis have seldom been consistent and have varied from a willingness to engage in discussions with representatives of democratic black organisations, to active support of the most severe repressive measures adopted by the Nationalist Government.

South African businessmen across the business spectrum are busily attempting to lay foundations for a future South Africa which can withstand the whirlwind of mass resistance, whilst maintaining intact the capacity for successful capital accumulation. In the midst of all this political architecture, it is evident that many representatives of capital, at very least in their public utterances, are willing to see "the Aoartheid system" condemned to the trash-heap of history.

However, "Political stability", be it attained through the barrel of a gun, support for governmental style "reform initiatives", some alternative "federal democracy", a negotiated settlement with the ANC, through "pure economic reforms", or through a combination of all of these, is viewed as the primary concern in obtaining this security.

In this respect two factors remain constant: Firstly, these political and social machinations are constantly integrated with particular (although often varying) economic strategies; and secondly, in the final instance, the military option represents the last line of defence against the liberation struggle in a country where, to quote John Saul: "... class relations are all too explicitly etched in black and white." (5) This means that in spite of the oft-quoted anti-Apartheid rhetoric coming from some sectors of the business community, it remains fundamentally within their interests to ensure that the military capacity of the Apartheid government remains intact.

It therefore comes as no great revelation to demonstrate the complicity of leading South African industrial corporations in the building of a local armaments industry over the last twenty years. However, the extent of the militarisation of the South African economy remains as much linked to its integration with particular economic interests and strategies as it is to the concerns with the politics of ultimate control.

The economic benefits of involvement in contract work for flrmscor are undoubtedly substantial. It seems to be a universal characteristic of the armaments industry that strategic concerns

take precedence over short-term cost-effectiveness. The result is that market prices for armaments-related industrial products tend to be rather inflated.

However, as far as Johan van Vuuren is concerned, the economic benefits to the business community in the development and investment in the armaments sector, go well beyond making a quick buck. He notes the developmental as well as private sector profit potential inherent in the arms industry's brand of privatisation. In an era of paranoia about the potential effects of sanctions, van Vuuren points to the lessons that can be learned by all sectors of South African industry, from Armscor's success in breaking the arms embargo on South Africa. (6)

In all these respects, Armscor is projected as an industrial model of succesful state economic planning. But even more importantly - van Vuuren goes so far as to argue that the armaments industry in South Africa offers the potential for solving some of the hitherto structural limitations on growth in the national economy. This view is based on the calculated beneficial effects for the whole of the manufacturing industry, of the development of locally produced high technology from within the armaments sector.

Van Vuuren, refering to the industrial usefulness of leading American high technology developed in the US space programme, claims that domestic technological breakthroughs in the armaments industry in South Africa are already having the same sort of beneficial developmental economic effects. Van Vuuren goes even further in arguing that the armaments sector, through its technological self-sufficiency programme, offers the potential to break the dependence of South African manufacturers on foreign technology. He argues that the implications of this would be that South African manufacturers could duck the restrictive licencing agreements which tend to accompany technology transfers and which prohibit competition between the lessor and the lessee of such high technology. On this basis it is argued that Armscor and the armaments industry as a whole, can offer South African manufacturers the potential capacity to break into -foreign export markets with products which are unique, if not always necessarily cheaper. (7)

In this manner, the likes of Johan van Vuuren place the development of the armaments industry at the heart of an export- led economic recovery programme. Should there prove to be any realistic possibility of such a scenario playing itself out, this would have a qualitative impact on our analysis of the nature and extent of militarisation of South African capitalism. By the end of this paper, through tracing the development of the arms industry and some of its constraints, it will hopefully be possible to make some evaluation of these perspectives.

2. A BRIEF HISTORY OF ARMSCOR AND ARMAMENTS PRODUCTION IN SOUTH AFRICA

If the development of an armaments industry in South Africa is really to be traced back to its roots, then it probably began with the production of munitions during the Second World War in order to supplement the allied war effort. In the course of the war the industry expanded rapidly, producing 50 000 000 rounds a year and employing 12 000 people in si:: factories country-wide. These included factories at Johannesburg, Ladysmith, Pretoria West and Kimberley. (S)

Predictably, at the end of the war the industry shrank fast, resulting in most factories either closing down or going into "civilian production". Nonetheless, in 1940 an Advisory Committee on Defence Force requirements was set up to investigate available resources for armaments production. In 194?, this Committee was transrormed into the Board of Defence Resources, responsible to the Minister of Defence for advice on all matters concerning the country's armaments potential.

Furthermore, in 1951 the Munitions Production Board was established as a subdivision of the Department of Defence. Two years later the Department of Defence set up the first rifle manufacturing plant and in 1960 the Munitions Production Board took over the munitions plant at Pretoria West, renaming it: Pretoria Metal Pressings.

It was from the turn of the decade, however, that the armaments industry really took off in bouth Africa. This was the product of a compination of factors, political, strategic and economic. It is impassible to detail all these developments here, but some brief pointers are important.

On the political front, this development of the arms industry and the form which it took, reflects the general response to a preceding period of intense popular struggle. The mass resistance of the 1950s, culminating in the pass protest and subsequent massacre of the protesters at Sharpeville on 21 March 1960, reflect the crisis of political and ideological control manifest within the Apartheid state. The subsequent banning of the ANC and the PAC and, as a consequence, the launch of organised armed resistance to Nationalist rule, provide the fundamental political backdrop to the organisational impetus and momentum subsequently generated within the South African armaments industry. The political orientation was internally determined and reflects a general tendency for the genesis of such a domestic armaments industry to reflect a response to the shifting form of popular class struggle.

At a strategic level, the immediate post-Sharpeville period saw the establishment of a Republic and simultaneously the first hints of international arms sanctions against South Africa. In response the Munitions Production Office was immediately expanded.

Finally, despite an initial outflow of capital after the Sharpeville massacre, the early 1960s saw the beginnings of one one the most sustained boom periods in the Apartheid economy. In pdrticular, the rapid expansion within the manufacturing sector provided the essential economic and financial underpinning for the development of a domestic armaments production capacity in South Africa.

The early 1960s therefore signalled the beginning of the significant shift in emphasis from the importation of arms themselves, to the procurement of arms technologies necessary to support local production. (9) As Frankel points out, in 1961 alone, 1^7 licences for the local manufacture of military equipment were negotiated with a wide range of foreiqn sources( 10 )

In 1963 the National Institute for Rocket Research was established at the L3IR and it immediately undertook the development of a ground to air missile svstem with radar support.(11) With a view to the furtherance of the missile programme, local scientists were recruited and sent overseas to study the principles and techniques of missile construction. This missiie programme was jointly financed by the South African and French governments and the missiles were developed with the assistance of a French electrical engineering concern - Thomson CSF. (12)

This thrust also indicated one of the growing (and endurinq) priorities of the fledgling armaments industry in South Africa. The development or a local armaments manufacturing capability was highly dependent on the prior aquisition of the necessary skills and technical knowhow, as well as the development of the necessary industrial infrastructure. The future of the industry depended on the access to- and local development of- the appropriate high technology. In the long term, this demanded substantial investment in the research and development of such productive technology, whilst in the shorter term it required both training of technicians and the securing of access to imported technology and licencing arrangements.

In 1964 the Armaments Production Board was established under the Armaments Act No. 87 of 1964. Its immediate objective was to extend ammunition production and its attendant infrastructures.(13) Three years later, in August 1967, the United Nations' Security Council passed it's first resolution calling on all states to stop the supply of arms to South Africa. The following year, the objective of laying the infrastructural foundations having been sufficiently achieved, the Board's name was changed to simply "The Armaments Board" under the Armaments Production Act of 1968, and its activities were substantially expanded to include control of production, procurement and supply of armaments in the broadest sense. In the same year, The Armaments Development and Production Corporation (Armscor) was established as a fully-fledged state enterprise which took over the previously government-cont.-ol led munition factories as

subsidiary companies.

The objects and tasks of Armscor as defined by the Armaments Development and Production Act of 1963 are to:

"... promote and co—ordinate the development, manufacture, standardisation, maintenance, aquisition, or supply of armaments by collaborating with, or assisting or rendering services to, or utilising the services of, any person, body or institution or any department of the state... To develop, manufacture, service, repair and maintain, on its own account or as the representative of any other person to buy, sell, import or export and through advertising or otherwise, to promote the sale of, armaments, including armaments required for export or firearms, ammunition or pyrotechnical products required for supply to members of the public..." (14)

The Armaments Development and Production Act (No.57 of 1968) did, however, place certain limits on the autonomy of the newlv constituted Armaments Board. The Act stipulated that all purchases of armaments by the Board had to be approved by the treasury. However, it was argued by the Defence establishment that this procedure was slow and hampered the efficient functioning of the Armaments Board. As a result of consultations between the Ministers of Defence and Finance, this inhibiting measure was discarded in 1974. (15)

By 1977 it was self-evident that the procurement of armaments by the Armaments Board and the control of armaments production could best be served by one body. As a result, under the Armaments Development and Production Act of 1977, the Armaments Board was amalgamated with The Armaments Development and Production Corporation to form the new Armscor. This merge came into effect on the 1st April 1977, thus marrying and centralising control over both production and procurement of armaments within the direct sphere of influence of the Department of Defence.

It is no coincidence that it was in the same year that the United Nations Security Council imposed a mandatory arms embargo on South Africa. By the time the arms embargo was imposed, and less than a year after the brutal repression of the 1976 resistance, a centralised and administratively efficient armamentsinfrastructure was in place under the autonomous control of the Ministry of Defence.

3. ARMSCOR - STRUCTURE AND EXPANSION

In the early history and periodisation of the development of the armaments industry in South Africa, many of the political, economic and strategic constraints and priorities which were to characterise its subsequent expansion are laid bare. From the early 1960s the threats to the Nationalist government's repressive capacity was evidenced by the first hints of international sanctions. This factor, combined with the

structural dependence on foreign armaments and technology, pre-determined both the trajectory of the development of the industry in South Africa, as well as its strategic significance, in the wake of the resort to armed struggle by illegalised mass- based organisations.

The security priority of the Apartheid government was encapsulated in the consequent thrust towards “self-sufficiency" in the production and procurement of arms. This strategic imperative demanded technological advance and extensive technical training as a pre-requisite, and this in turn necessitated the increased integration of the domestic armaments industry with the expansion of the manufacturing sector as a whole. Indeed, the current structure and function of the industry reflects these very exigencies.

The strategic imperatives which lay at the root of Armscor's development have resulted in the corporation's activities being clothed in a shroud of secrecy and protective legislation. This is even true of the central Armscor structures. The Armscor Board is appointed by the State President and is responsible to the Minister of Defence. It includes the Chief of the SADF and the Director-General of Finance. The rest of the Board members are primarily drawn from private finance and the manufacturing and commercial sectors. The names of the directors of Armscor are not made puDlic for security reasons. Very little information is available on even the structure of the enterprise, resulting in some confusion and disagreement among analysts over even the most basic facts.

Both Ratcliffe and Frankel, writing in 1983 and 1934 respectively, suggest that Armscor has twelve nationalised subsidiary companies directly under its auspices. (16) Ratcliffe lists 11 of these. They are: Atlas Aircraft Corporation, Pretoria Metal Pressings, Naschem, Somchem, Swartklip Products (Pty) Ltd., Lyttleton Engineering Works, Musgraves Vervaardigsrs en Verspreiders (Pty) Ltd., Eloptro, Kentron, Telcast Engineering Works (Pty) Ltd. and Nimrod. (17) By contrast, Grundy, writing in 1983, suggests that there are only nine. (18) Wha-t is clear is that Armscor's assets increased from R200 million in 1974, to Rl,3 billion in 1984 and to around Rl,70 billion in 1987/8, indicating overall growth in size over this period of approximately 650%. (19) The corporation employs 23 000 people within its immediate subsidiaries (20) and supports a further 100 000 jobs at least in the private sector.(21)

There is further uncertainty about the exact extent of Armscor's contractual relationships with private sector companies. Ratcliffe suggests that Armscor distributes work to over 1 200 private industry contractors and sub-contractors and that at least 400 companies are dependent on Armscor contracts for their survival (22). Grundy estimates that the corporation has around 3 000 private sub-con tractors. (23) Armscor Chief Executive, Johan van Vuuren refers to 975 companies supplying Armscor direct. This implies a lot more which are further sub­

contractors. (24) There is clear agreement on at least one thing about Armscor: today it is the 10th largest armaments producer in the world and the largest in the southern hemisphere!

Perhaps more importantly, there is little disagreement about the "fact that Armscor has been highly successful in developing its production capabilities in the past decade or so. Srundy claims that whereas in 197&, 707. of the defence budget went to material imports, today this is around 15V.. (25) The 1982 Defence White Paper claimed that by 1983 the corporation was self-sufficient in the production of the following products:

* Artillery guns and rockets;* Artillery fire control equipment;* Short range guided missiles;* Mini—computers;* Mine detectors, mine detonators and mine resistant vehiclas;

* Operational vehicles;t Armoured vehicles ̂ Tactical telecommunication equipment;* Anti-personel, anti-vehicle and programmed ground mines; and

* Arms and ammunition. (26)

Franke1 more than reinforces these perspectives:

... in the fifteen years of its existence Armscor has oroved an almost unattenuated success - in developing the 'South African arms industry to a high degree of self-sufficiency in the face of international sanctions and, of no lesser importance for domestic politics, in locking together the military, government and economic elite into a tiqht tripartite network in support of Apartheid policy." (27)

However, the exact nature of flrmscor's proclaimed self- sufficiency needs to be more closely examined. The extent of the industry's technological independence seems to be very much conditioned by the involvement of private sector companies which facilitate the access to vital technology through acting as conduits for US and Western European multi-national corporations.

4. ARMSCOR AND THE PRIVATE SECTOR

From the very early days of arms production in South Africa. the concern of armaments producers was to encourage the willing and active involvement of the private sector in the production of armaments and related technology and components. Thus, prominent figures in the arms industry, such as Johan van Heerden and Fred Bell, have argued that “privatisation" is not a new strategy, but has always been seen as a priority by Armscor.

The process of integration of security and business interests was, however, not left to chance. On one hand, the material

benefits involved for the private sector were great. Cost effectiveness being of less significance than the strategic priorities, it was viewed from the outset as essential to give business a material stake in the expansion and upgrading of the armaments sector.

On the other hand, legislative measures were introduced to ensure that some security was attained in guaranteeing the participation of the broader business community. These included the Atomic Energy Act as amended in 1979, the Petroleum Products Amendment Act of 1979 and the National Supplies Procurement Act of 1970 as amended in 19/9. The latter Act provides the Minister of Defence with the power to order any company or individual to produce or supply any goods or services required in the defence of the country. Under the Act it is also illegal to disclose

"... any information in relation to the aquisition, supply, marketing, import, export, development, manufacture, maintenance or repair of, or research in connection with armaments." (28)

It is not surprising that all of these strategic concerns found their expression in amended legislation only a short period after the adoption of United Nations Security Council resolution 418 which imposed the mandatory arms embaroo on South Africa.

Finally, the approach to integrating the interests of the business comunitv with those of the arms producing sector was also an ideological one - captured in the alluring thrust of the "total onslaught" "total strategy" couplet. However. the ideological appeal was not by any means a consistent guarantor of business support for the security concerns of the government. However, if the business community demonstrated itself to be a fickle political ally for government during this period, then it was considerably more consistent in its material and industrial support within the armaments sector. If Apartheid policies were regarded by many business leaders as reprehensible or undesireab1e, then this did not at any stage compromise the contribution of these private sector interests to the militarv and security concerns of the state as expressed in the needs of Armscor.

The dual thrust in relation to the business community was therefore two pronged: to foster the industrial input into the armaments sector on one hand, whilst infusing the whole of industry with the concerns of the military through both ideological and material stimuli, on the other.

The consequent achievements in armaments production has been no mean feat as Frankel noted. By this year Armscor could boast of the local production of the famous G& 155mm lonq—range self- propelled Howitzer which “proved" itself in the siege of Cuito Cuanavale. (29) There have also been reports that Armscor has produced its own air-to-air "side-winder missile" (30) as well as the "super— modified" version of the Puma 330 helicopter gunship

(31) to mention but a few of its achievements.

Yet despite all these achievements there is still some doubt as to the extent to which they represent the achievement of military self-sufficiency through import substitution. The very reliance on the contribution of the private sector suggests that local corporations, rather than producing and upgrading the essential technology servicing the arms industry, are serving as the conduit through which this essential technology is brought into the country through the back door via links to multi-national corporations. This is best demonstrated by example, by none more than the leading local industrial supplier of flrmscor — Barlow Rand.

5. THE BARLOW RAND EXPERIENCE

Barlow Rand is the biggest industrial corporation in the country and one of the largest South African monopolies. The corporation presents itself an an enlightened opponent of Apartheid and chairman Rosholt continually claims to be committed to the upliftment of the country's workers and regularly expounds business's role in bringing about meaningful change in South Africa. Yet desoite this "liberal" image, the corporation is one of the most fundamental support bases for the production of technology and armaments so fundamental to the reoressive capacity of the Apartheid state.

Thomas Barlow and Sons began as a British textiles producer and at the beginning of the century established itself in South Africa as an importer and distributor of electrical supplies. Following the economic boom of the 1960s, Barlows entered the mining sector through the take over of Rand Mines in 1971.

The following year F'W Botha, then Minister of Defence, established the Defence Advisory Council to discuss broad policy issues. Invited to sit on the 1st council were: the Chief of the SADF, his retired predacessor, the Chairman of Armscor and two industrialists - Wim de Villiers, chairman of General Mining (GENCOR) and CS “Punch" Barlow, chairman of Barlows. One of Gencor’s subsidiary companies to this day is Sandrock Austral, the manufacturer of French— liscenced armoured cars since 1963. Barlow's presence on the council at that stage seemed to have no such logical connection.

However, by 1977 the connections became somewhat clearer. Barlows had become involved in the limited distribution of electronic components from the 1960s. The corporation began supplying the SADF through Barlows Electronics Ltd., which from 1963 secretly became one of the two chief electronics suppliers to the SADF.(32) This included a contract to supply the army with locally assembled Thomson—CSF radios from France. (33)

In 1977 Barlow Rand bought the CJ Fuchs Group, best known in South Africa as a manufacturer of household appliances. Soon thereafter they bought a 50X stake in the British giant General

Electric Company (South Africa). Included in thi3 deal was Marconi South Africa, a major supplier of radar and communications equipment to the SADF.

Less than a year after these aquisitions, Barlows established Barlab, a training research and design facility in electronics at the university of Pretoria. By the end of 1980, Barlows employed about 4 000 people in the electronics division, with a turnover of R120m. 1980 also saw Barlows launch into the computer sector by buying a 517. stake in Perseus, local agent of the US giant, Data General. (34)

The head of the Barlows electronics division during this period was Johan Maree. In 1979, Maree was seconded by Barlows for three years to serve as the Armscor Chief Executive.

In 1980, with P.W. Botha's rise to power, the old Defence Advisory Council was replaced by an enlarged Defence Advisor/ Board to which 13 of the biggest names in South African industry were appointed. Included were the new Barlows CE, A.M. Rosholt and two other members of the Barlows board: R Goss (Managing Director of South African Breweries) and F Cronje (Chair of Medbank). (35)

By this stage, Barlows was reaay to begin a process of corporate restructuring which was launched in 1982 with the establishment of a new company, BarlowData, complete with a brand new R3m headquaters and 5 operating subsidiaries.

However, Barlows' major restructuring process came in the following year. Reunert, a Barlow subsidiary in property and the motor industry was stripped of all its assets and the corporate shell used to group together all Barlows high technology operations. Reunert was subdivided into four groups: Reunert Informations Systems (computers and control systems); Reunert Technology Systems (Reutech); GEC (electrical engineering); and a mechanical division (later to be sold to allow Reunert to concentrate in the electrical and electronic fields). (36)Within just four years Reutech had surfaced publically as one of the most important suppliers of military electronics in South Africa. Reutech is made up of five companies which despite increased publicity, continue to operate primarily within the sphere of the South African armaments industry.

Fuchs Electronics: produces a wide range of radios including frequency hopping versions. It also manufactures the electronic fuses for most of the bombs, mortars and rockets in SADF service. (37)

Barcom: produces the Z66, the standard area defence radio linking white farmers throughout the rural areas with their local commando unit. Barcom is also active at the high-tech end of the market, most probably in electronic warfare equipment. (33)

ESD: apoears to be an amalgamation of Barlows Electronics and Marconi (still aparently 50X-owned by its British parent GEC). When Marconi (UK) updated the S247 radars of the SA Airforce's Northern Air Defence Sector in 1983, it was through ESD that the equipment was channeled. (39) ESD is involved in "avionics, weapon electronics, digital systems, electronic warfare, secured speech, radar systems and radio communications systems". (40) This Paratus supplement stated that ESD was responsible for completion of the SADF's "large telecommunication network”.

Little is known of Reutech's other two companies Aser.ua and OMC Engineering, but there are same indicators. In 1993, OMC, operating in Kempton Park with a workforce of over 1 000, dismissed a senior executive because he was unable to obtain an upgraded security clearance from the SADF. The new clearance was required because OMC work was reclassified from "confidential" to "secret priority”. (41)

Reutech is clearly an indispensable element within the South African mi 1itary-industrla 1 complex, and that it has reached this position through the workings of a particularly well-greased mutual appreciation society is obvious. Nonetheless the profitaPility of Reutech seems well worth examining further.

Why Barlows was chosen to be the standard bearer of high teen private sector military co-operation, is not entirely clear. But the fact that Barlows, despite having no manufacturing experience whatsoever in these fields, was an active distributor of electronic components, could well be a pointer.

The Reunert group lies at the centre of a web of international connections on which the South African electronics industry is completely dependent. Components, designs, test equipment and a variety of other essential elements flow into the country relatively unhindered.

A survey of Armscor weapons systems published in the Geneva^based International Defence Review highlighted a Reutech product, the AS80 ArtilLery Fire Control System, supposedly designed by ESD for use with the SADF's G5 howitzers. Defence Review claimed that the computer components were all of US origin and an Armscor spokesperson was quoted as saying that getting the components "was not a problem”. (42)

In 1985, Barcom won a South African award for the design of a synchronisation processor — a microprocessor for frequency- hopping communications. But despite the likely boasts of local self-sufficiency and import substitution, the chip was in fact designed "in consultation” with AEI Henley Micro Electronics Division. AEI Henley is a Reunert subsidiary, but it is still SOX owned by its British parent, GEC. Telcor, another Reunert company, operates a range of distribution agencies for US and British electronics companies. On the computer side, Barlowdata represents amongst others Japanese Hitachi and the US-based Data General.

In a nutshell, Reunert is an amalgamation of subsidiaries and agencies of the world industry. In the words of the Reunert managing director: "Most local manufacture is merely assembly of imported parts". (43)

The Barlow Rand experience casts some light on the claims to self-sufficiency in arms production in South Africa. The catalogue of similar loopholes are documented extensively and indeed it is no secret that Armscor takes pride in reqularly breaking the arms embargo. (44) It is not possible or desireable to document all the examples of these industrial manoeuvres as they are dealt with elsewhere and despite the secrecy, many cases have found there way into the commercial press and even into the courts in other countries. They include the establishment of clandestine foreign companies, bogus disinvestment schemes or management buyouts and straight smuggling. (45)

6. CONCLUSIONS

In the final analysis, the South African armaments industry remains essentially technological ly dependent. Where access to military technology is domestically available, this is still largely based on the remodeling of licenced military hardware. Furthermore, there are some areas in which the Armscor arsenal is still severely lacking, most notably in the capacity to produce militarily competative aircraft and naval vessels. This latter case was graphically demonstrated in the scandal which emerged as a result of the smuggling of submarine blueprints out of" West Germany in a consular bag. It was alleged that top ranking German politicians were involved in the affair, as well as top South African consular staff. (46)

The implication seems to be that the South African armaments industry is still more of an assembly than a production enterprise. The fundamental technological dependency at this stage remains - if for no other reason than because of South Africa's undeveloped research and development capabilities. The rules of technology transfer remain intact and as a third world economy, South Africa remains dependent on periodical rehiring of updated technology. However, through intensive research and massive investment, the South African oil-from-coal industry does provide a- local example of the capacity to generate novel and strategically indispensable technological innovations, which seem not to be completely beyond the reach of the South African arms industry.

There can be no doubt that, despite the long-term vulnerability of the armaments industry to effective international sanctions, at present, Armscor is successfully able to supply the SADF with all of its immediate needs. In fact, the industry is having to cut back to avoid going into ovei— production.

Perhaps of even greater significance is the extent to which the

South African arms industry has been able to cultivate an export market. Today Armscor can claim to be the biggest single exporter in the South African manufacturing industry and boasts of exports to 23 other countries, worth Rl,8 billion in 1987. (47) In some senses this is less surprising than it may seem. The arms trade is a notoriously dirty business and South African arms, uniquely suited to third world terrains are extremely marketable by virtue of having been tried and tested. The availability of fellow "pariah states" in Latin America and the Middle East, provide a willing and eager market for ideologically contaminated arms from South Africa. (48)

The succesful cultivation of an export market in armaments must have some bearing on the assertions of Jonan van Vuuren, quoted at the beginning of this paper, with respect to the potential of the arms industry as a leading force on the road to economic growth and recovery in South Africa. Indeed, this spin-off benefit potential for the rest of the South African manufacturing is given considerable coverage in the 1986 Defence White Paper.(49) Albeit in somewhat convoluted style, the White Paper argues that Defence expenditure, through supplementing and renewing industrial production, as well as through developing resourcss and industrial infrastructure, is stimulating economic growth and is providing both direct and indirect benefits to aevelooina industrial economic activities in all sectors. (50)

The specific thrust of this economic analysis is to argue that the development of the armaments industry and the technological innovations within it, are resulting in commercial and industrial applications for the South African economy as a whole. (51) To the extent that this is true, it represents a central process in the developing militarisation of the South African economy. Of particular importance, it graphically demonstrates the extent to which the political, strategic and economic aspects of arms production have become fundamentally integrated.

It remains to be said, however, that the successes of the armaments industry rest on very insecure technological and ideological foundations. The capacity to cultivate an arms export market of unique and cost-inefficient products is not simply transferable to other sectors of the economy as are the technological benefits. South Africa's basic third world economic status is not about to be altered as a technological dependent, in spite of the Armscor propaganda as espoused by van Vuuren.

Ultimately, the very political and economic crisis which breathed life into the South African arms industry, is simply being exacerbated by its development. The money spent on bullets and buckshot, is ultimately drawn from the wealth generating capacity of the oouth African working class. It is wealth unproductively spent and expended. Rather than generating growth, ever increasing defence expenditure will contribute to escalating inflation, continued contraction in the growth potential and employment potential of the South African economy and, inevitably, will play its part in the escalation of political

conflict and violent struggle in South Africa.

FOOTNOTES(1) Finansies en Teqn iek. 12/9/36.(2) Defencg Whi te Paper (1986), pp. 8—9.(3) Ibid . . p.9.(4) Frankel, P. H., Pretoria's Praetorians. Cambridge University

Press (1984), pp.32-95. Ratcliffs' S. T., "Forceful Relations: The State, Crisis and the Rise of Militarism in South Africa", Unpublished Hons. Dissertation, University of the Witwatersrand (1983). Frankel talks of a “lower— order mi 1itary-industrial complex" while much of Ratcliffe's discussion is focussed on the existence in South Africa of a "Department III" within the South African economv.

(-/) bau1, J . , ........... . New Lef t Review.

(o) Finansies en Tegniek. 12/9/86; and Finansies en Teoniek. jO/1/8/: "Krygkor See Vuurkrag aan Nvwerneid: Waoenbedryf Bied Nyweraars 'n Kans am Leiers in Hoe Tegnoloqy te Word".

(7) I b i d .

(8) See Frankel, P.H., opcit.. p.94; and Ratcliffe, S.T.. opcit.. pp. 72-3.

(9) Frankei, P.H., ibid.. p.32.(10) Ibid. Radcliffe suggests that only bv 1965 had South Africa

secured the licences complete with blueprints for 120 armaments to be produced locally. Radcliffe, S.T.. opcit.. p.74 . )

(11) Radcliffe. S.T., ibid.. p.74; Sunday Times. 27/10/63.(12) Ratcliffe, S.T., ibid.■ p. 74.(13) Ibid. . p.75.(14) Armaii'ients Development and Produc tion Act (No. 57 of 1963)(15) Ratcliffe., 5.T., opcit.. p.75(16) Frankel, P.H., opcit.. p.84; Ratcliffe, S.T., ibid.. p.77.(17) Ibid■ . pp.SO-84.(18) Grundy, K.W., The Mi 1itarisation of South African Politics.

Oxford University Press (1988), p.45.(19) Frankel, P.H., opcit. . p.33; Grundy, K.W., opcit.. p.45;

Ratcliffe, S.T., opcit.. p.77.(20) 1986 Defence White Paper. This is down from 29 000 in 1984.(21) Frankel, P.H., opcit. . p.34; Grundy, K.W., opcit.. p.45;

Ratcliffe, S.T., opcit.. p.77.(22) Ratcliffe, S.T., ibid.. p.77.(23) Grundy, K.W., opcit.. p.45.(24) Business Day, 21/9/87.(25) Grundy, K.W., opcit.. p.46.(26) 1982 Defence Whi te Paper. p.25(27) Frankel,P.H., opcit.. p. 82.(28) National Supp1ies Procurement Act of 1970(29) The Star. 28/1/88.(30) Pretoria News. 23/11/87.(31) The Star. 30/4/87.(32) Rand Daily Mail. 21/2/85.(33) Janes Defence Weeklv. vol.4, No. 9, 1983, p.830.(34) Bar low Rand. Annua 1 Report (1980).(35) Paratus. June, 1980.(36) Financial Mai 1. 31/8/34.

(37) Armed Forces. March, 19B6.(33) Ibid.. 1985.’(39) Observer. 24/4/83.(40) Paratus Supplemen t. 1982.(41) Sunday Times. 21/3/83.<42) International Defence Review. No.3/1983, p.270.(43) Financial Mai 1. 21/6/85.(44) Interview with Piet Marais, Armscor Chairman in Enqineerina

News. 22/4/88.(45) See here Vayrynen, R., "The Role of Transnational

Corporations in the Military Sector of South Africa", JSAA, Vol. 5, No. 2, 1980; and the Submission by the Anti- Apartheid Movement of Great Britain to the Public Hearings on the Activities of Transnational Corporations in South Africa and Namibia, "How Britain Arms Apartheid", United Nations, New York, September 1985.

(46) Bee Id. 27/11/86; and 26/1/37.(47) Business Dav. 22/1/88.(48) See Vayrynen, R., opcit.(49) See figure 1, p.34 and Table 1, p.37 of the Defence White

Paper, 1986, attached to the end of this paper.(50) Ibid. . pp. 34-3S.(51) See Table 1, p. 37, Defence White Paper, 1986, attached

hereto.

Collection Number: AG1977

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