Disarmament and Defence Industrial Adjustment in South Africa

Since the end of apartheid, the end of the cold war and the elections of 1994, South Africa has cut its military expenditure drastically (by almost half between 1989 and 1995) and it is seeking to use the resources released—the peace dividend—to restructure and revitalize the country's industrial base and to support reconstruction, development and redistribution. The regional environment has stabilized, a lively debate on the country's security needs and strategic doctrine is under way, and the new ANC-led government has a unique opportunity to develop new and innovative policies on defence and security matters, the arms industry and arms exports.

The defence industry, built up during the apartheid years and during the UN embargoes on sales of arms to South Africa, became one of the most important sectors in the country's industrial base and a significant exporter. Since 1989 it has been shrinking and seeking to survive by a combination of downsizing, rationalization, mergers and joint ventures, internationalization, the promotion of exports, diversification and conversion of facilities to civil use. As in other countries, strategies of diversification and conversion have met with limited success. In the absence hitherto of any coherent government policy on defence industrial adjustment or on the impact of closures of companies, significant skills and technologies which were embodied in the defence industry have been lost or wasted. Indeed, in the absence of policy the opportunity to maximize the benefits of defence industrial conversion may have passed.

The analysis of the South African experience provides a valuable contribution to the international debate on the economic effects of military expenditure and defence industrialization and on the relationship between disarmament and development in developing countries.