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Transnational Corporations and the South African Military-Industrial Complex

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Transnational Corporations and the South African Military-Industrial Complex Transnational Corporations and the South African Military-Industrial Complex http://www.aluka.org/action/showMetadata?doi=10.5555/AL.SFF.DOCUMENT.nuun1979_26 Use of the Aluka digital library is subject to Aluka’s Terms and Conditions, available at http://www.aluka.org/page/about/termsConditions.jsp. By using Aluka, you agree that you have read and will abide by the Terms and Conditions. Among other things, the Terms and Conditions provide that the content in the Aluka digital library is only for personal, non-commercial use by authorized users of Aluka in connection with research, scholarship, and education. The content in the Aluka digital library is subject to copyright, with the exception of certain governmental works and very old materials that may be in the public domain under applicable law. Permission must be sought from Aluka and/or the applicable copyright holder in connection with any duplication or distribution of these materials where required by applicable law. Aluka is a not-for-profit initiative dedicated to creating and preserving a digital archive of materials about and from the developing world. For more information about Aluka, please see http://www.aluka.org Transnational Corporations and the South African Military-Industrial Complex Alternative title Notes and Documents - United Nations Centre Against ApartheidNo. 24/79 Author/Creator United Nations Centre against Apartheid; Seidman, Ann W.; Makgetla, Neva Publisher United Nations, New York Date 1979-09-00 Resource type Reports Language English Subject Coverage (spatial) South Africa Coverage (temporal) 1979-00-00 Source Northwestern University Libraries Description Introduction. Transnational corporate investments in the South African military-industrial complex. The South African control network. Iron and steel. Chemicals. Transportation industry. Electrical equipment and machinery. Computers. Nuclear technology. Other military-related industries. The transnational corporate oil industry. Transnational corporate transfer of military equipment and weaponry. Direct and indirect transnational bank finance of military expenditures. Transnational banks' South African affiliates. The transnational banks' contribution. Transnational banks as wholesalers for credit to South Africa. International banking consortia. Transnational banks' role in mobilizing foreign credit. Home Government insurances and guarantee programmes. South African gold. Conclusion. Format extent 68 page(s) (length/size) http://www.aluka.org/action/showMetadata?doi=10.5555/AL.SFF.DOCUMENT.nuun1979_26 http://www.aluka.org CENTRE AGAINST CENTRE AGAINST APARTHEID DEPARTMENT OF POLITICAL AND SECURITY COUNCIL AFFAIRS NOTES AND DOCUMENTS* 24/79 ; I~iit September 1979 '- Y N~V ~ TRANSNATIONAL CORPORATIONS AND THE SOUTH AFRICAN MILITARY-INDUSTRIAL COMPLEX by Ann Seidman and Neva Makgetla L-Note: This issue is published at the request of the Special Committee against Apartheid. Professor Seidman is Visiting Professor at Brown University, Providence, Rhode Island. She is the author of several books and articles on the economies and development of southern Africa. Mrs. Makgetla is a graduate student in economics. The views expressed are those of the authors.J 79-234o07 All material in these notes and documents may be freely reprinted. Acknowledgement, together with a copy of the publication containing the reprint, would be appreciated. Js Table of Contents Pages Introduction.......................1 I. Transnational corporate investments in the South African military-industrial complex ..... ... ................ The South African control network ................. 6 Iron and steel . ........................... ...... 11 Chemicals . ............. ......................... .. 16 Transportation industry ........ .*.. *. ....................... 18 Electrical equipment and machinery . .. 22 Computers . .. ......................... 25 Nuclear technology . .......................... 0 . .. 27 Other military-related industries . 30 The transnational corporate oil industry ........... 32 II. Transnational corporate transfer of military equipment and weaponry ......... .......... III. Direct and indirect transnational bank finance of military expenditures...............*0....... 42 Transnational banks' South African affiliates . 44 The transnational banks' contribution . 48 Transnational banks as wholesalers for credit to South Africa . 53 International banking consortia . 0 & . .. .. .. 54 Transnational banks' role in mobilizing foreign credit . 55 Home Government insurances and guarantee programmes . 61 South African gold . ....................... 63 IV.Conclusion.............................66 -1- Introduet ion Transnational corporations continue to play a crucial role in strengthening the South African r6gime's military capability, despite the United Nations mandatory arms embargo, in three ways. First, transnationals continie to provide technology and finance to build up the key advanced, capital-intensive machinery and equipment industries that constitute the foundations of the military~.industrial complex that enables South Africa to boast that it can produce 75 per cent of its own military requirements demestically. / Transnational firms with subsidiaries and/or affiliates in South Africa also ship in parts and materials for the basic military equipment and machinery they produce there. Secondly, transnational corporations sell to South Africa that 25 per cent of the weapons and military machinery which South African industry cannot yet produce. Thirdly, transnational corporate banks and associated financial institutions continue to help the South African regime obtain the necessary finance to buy the military equipment and weapons produced domestically and internationally. It is impossible to obtain aggregate data to expose the full extent of continued transnational corporate involvement in the South African military build-up because such activity has, over the years, been conducted in violation, first, of the voluntary United Nations arms embargo imposed in the early 1960s; and, secondly, since 4 November 1977, the United Nations mandatory arms embargo. This brief paper, therefore, only provides illustrations of the way transnational corporations have participated in these three types of activities. I. Transnational corporate investments in the South African military-industrial complex The rapid expansion of military expenditures by the South African minority regime, following the Sharpeville massacre, significantly stiiulated the multiplication of transnational corporate investments there in the 1960s and 70s. The United States military journal, Armed Forces Journal International, observed that South Africa's increasing expenditure on capital goods for the military, "has resulted in development of skill locally, and has provided economic growth to the country." 2/ Transnational corporations investing in South Africa benefitted both directly, in the form of contracts to sell parts and materials to the military, and indirectly in terms of a more generally expanded market. I/ Abdul S. Minty, statement to the United Nations Special Committee against Apartheid, A/AC. -115/L. 485. a/ Armed Forces Journal Internationa1 (Washington, D.C.), June 1973. -2- South Africa's military expenditures multiplied rapidly after the Sharpeville massacre, over six times by the end of the 1960s. By 1977/1978 it had more than quadrupled again to total $1,645 million. J/ In 1978/1979 it rose still further to $1,929 million. / The South African Government, itself, entered directly into military production through ARMSCOR , a parastatal holding company created in 1969. About 70 per cent of the Government's defence expenditures for armaments goes to ARMSCOR's seven wholly-owned subsidiaries. _/ ARMSCOR makes hundreds of contracts' each year with private firms, including subsidiaries of transnational corporations, to produce parts and materials for incorporation in military supplies and equipment. After 1970, the South African army began to introduce the most modern equipment available. This was especially important to enable the scarce supply of skilled white workers to man the expanding military force without drawing on blacks. The share of the defence budget allocated for "armament procurement and special equipment to replace obsolete gear" rose from about a third to half of the total in the first three years of the 1970s. 6/ About $280 million was spent on aircraft, $125 million on ammunition, and $110 million on radio, radar and other electro-technical equipment. The South African regime took steps to stimulate local manufacture of as many of the essential parts and equipment for its growing military establishment as possible. 7/ At the end of 1978, about Rl billion of ARMSCOR spending - two thirds of the total military budget on domestic armaments production in the coming fiscal year - was expected to provide further major stimulus for the socalled "private" sector. About 60 per cent of ARMSCOR's spending "goes directly into private enterprise coffers and another R300 million is contracted to ARMSCOR's subsidiaries which in turn subcontract up to 75 per cent of their work to the private sector." 8/ The United States publication, International Defense, 9 reported in the early 1970s that South Africa could manufacture a wide range of explosives, ammunition, small arms, napalm bombs, guided missiles, aircraft, radios, mine detectors and other classified electronic equipment. Strict South African Government secrecy laws make
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