Arms Procurement Decision Making Volume II: Chile, Greece, Malaysia, Poland, South Africa and Taiwan Stockholm International Peace Research Institute SIPRI is an independent international institute for research into problems of peace and conflict, especially those of arms control and disarmament. It was established in 1966 to commemorate Sweden’s 150 years of unbroken peace. The Institute is financed mainly by the Swedish Parliament. The staff and the Governing Board are international. The Institute also has an Advisory Committee as an international consultative body. The Governing Board is not responsible for the views expressed in the publications of the Institute. Governing Board Ambassador Rolf Ekéus, Chairman (Sweden) Dr Willem F. van Eekelen (Netherlands) Sir Marrack Goulding (United Kingdom) Professor Dr Helga Haftendorn (Germany) Dr Catherine Kelleher (United States) Professor Ronald G. Sutherland (Canada) Dr Abdullah Toukan (Jordan) The Director Director Dr Adam Daniel Rotfeld (Poland) Stockholm International Peace Research Institute Signalistgatan 9, S-169 70 Solna, Sweden Cable: SIPRI Telephone: 46 8/655 97 00 Telefax: 46 8/655 97 33 E-mail: [email protected] Internet URL: http://www.sipri.se Arms Procurement Decision Making Volume II: Chile, Greece, Malaysia, Poland, South Africa and Taiwan Edited by Ravinder Pal Singh OXFORD UNIVERSITY PRESS 2000 OXFORD UNIVERSITY PRESS Great Clarendon Street, Oxford OX2 6DP Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide in Oxford New York Athens Auckland Bangkok Bogotá Buenos Aires Calcutta Cape Town Chennai Dar es Salaam Delhi Florence Hong Kong Istanbul Karachi Kuala Lumpur Madrid Melbourne Mexico City Mumbai Nairobi Paris São Paulo Singapore Taipei Tokyo Toronto Warsaw and associated companies in Berlin Ibadan Oxford is a registered trade mark of Oxford University Press in the UK and certain other countries Published in the United States by Oxford University Press Inc., New York © SIPRI 2000 First published 2000 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of SIPRI or as expressly permitted by law, or under terms agreed with the appropriate reprographics rights organizations. Enquiries concerning reproduction outside the scope of the above should be sent to SIPRI, Signalistgatan 9, S-169 70 Solna, Sweden You must not circulate this book in any other binding or cover and you must impose the same condition on any acquirer British Library Cataloguing in Publication Data Data available Library of Congress Cataloguing-in-Publication Data Data available ISBN 0-19-829580-4 Typeset and originated by Stockholm International Peace Research Institute Printed in Great Britain on acid-free paper by Biddles Ltd., Guildford and King’s Lynn Contents Preface ix Acknowledgements x Acronyms xi 1. Introduction 1 Ravinder Pal Singh I. Background 1 II. Strengthening the role of society in monitoring defence policy 2 III. The policy-making and review cycle 4 IV. The scope, method and conduct of the study 6 Table 1.1. Oversight of military functions and the components of military 3 power Table 1.2. The policy-making and review cycle 5 Table 1.3. The four major themes of this study 6 2. Chile 9 Francisco Rojas Aravena I. Introduction 9 II. The background to arms procurement decision making 10 III. The present arms procurement system 17 IV. The defence budget and socio-economic aspects 21 V. Technical and industrial problems 28 VI. Behavioural or organizational issues 32 VII. Conclusions: the ideal decision-making process for arms 37 procurement in Chile Figure 2.1. The Chilean Ministry of Defense 10 Figure 2.2. The defence advisory agencies in Chile 14 Figure 2.3. The stages of the arms procurement process in Chile 16 Figure 2.4. The budget law process in the Chilean Congress 24 3. Greece 39 Stelios Alifantis and Christos Kollias I. Introduction 39 II. National security priorities and arms procurement experience: 41 a historical overview III. Defence planning 44 IV. Arms procurement decision making 51 V. The defence budget process 56 VI. The defence industrial and technology base 58 vi ARMS PROCUREMENT DECISION MAKING VII. Democratic oversight 62 VIII. Conclusions 66 Figure 3.1. US influence on defence and security policy in Greece 42 during the early post-World War II years Figure 3.2. The organization of the Greek Ministry of National Defence 46 Figure 3.3. The organization of the Hellenic National Defence General 48 Staff Figure 3.4. The drafting of the Greek medium-term arms procurement 50 programme Figure 3.5. The organization of the Greek General Directorate of 60 Armaments Figure 3.6. Procurement decision making in the Greek Armaments 61 Programmes Directorate 4. Malaysia 67 Dagmar Hellmann-Rajanayagam I. Introduction 67 II. The structure of the defence organizations 68 III. National security concerns and defence planning 72 IV. Arms procurement planning 76 V. The defence budget and financial planning 81 VI. Defence industrial aspects 86 VII. Checks and balances 91 VIII. Conclusions and recommendations 95 Figure 4.1. The Malaysian Ministry of Defence 70 Figure 4.2. The organization of the Malaysian Armed Forces Council 71 Figure 4.3. The Malaysian tender and procurement process 78 Figure 4.4. The Malaysian annual budget cycle 82 Figure 4.5. Malaysian financial planning under the five-year plan 84 Figure 4.6. The Research and Development unit of the Malaysian 88 Defence Science and Technology Centre Appendix 4A. Offset arrangements between Malaysia and the 104 German Naval Group 5. Poland 106 Pawel Wieczorek and Katarzyna Zukrowska I. Introduction 106 II. The management of national security and defence planning 106 III. The arms procurement decision-making process 115 IV. Arms procurement procedure 116 V. Financial planning and the defence budget 119 VI. The Polish defence industry 122 VII. Factors influencing arms procurement 131 VIII. Democratic oversight 136 C ONTENTS vii IX. Conclusions: an ‘ideal type’ of arms procurement decision- 139 making process for Poland Figure 5.1. Organization of the Polish Ministry of National Defence, 108 July 1999 Figure 5.2. The Polish defence policy-making sequence 113 Figure 5.3. The Polish defence planning process 114 6. South Africa 142 Gavin Cawthra I. Introduction 142 II. Arms procurement under apartheid and during the transition 143 to democracy III. The current arms procurement process 148 IV. Financial and budget questions 162 V. Techno-industrial questions 165 VI. Organizational and behavioural issues 172 VII. Towards an ‘ideal type’ of arms procurement decision- 175 making process for South Africa Table 6.1. Arms procurement decision making in South Africa, 144 1961–94 Table 6.2. Defence R&D expenditure in South Africa, 1987–96 171 Figure 6.1. The structure of the South African Ministry of Defence 152 Figure 6.2. The arms procurement decision-making process in South 153 Africa Figure 6.3. Strategic planning in South Africa 154 Figure 6.4. The organizational structure of Armscor 158 Figure 6.5. Evaluation of arms systems in South Africa 163 Figure 6.6. The interweaving of defence and civilian technology in 170 South Africa 7. Taiwan 180 Chih-cheng Lo I. Introduction 180 II. Formulating the national security and defence strategy 182 III. The arms procurement decision-making process 191 IV. The budget planning and programming process 199 V. Defence technology and industrial considerations 204 VI. Legislative and public-interest monitoring 209 VII. Conclusions 216 Table 7.1. Select major arms orders by Taiwan, 1990–98 189 Table 7.2. The stages of arms procurement in Taiwan 193 Table 7.3. Percentage of offsets in selected arms transfers, 1980–92 204 Table 7.4. Taiwan’s decentralized scientific R&D institutions and 206 agencies Table 7.5. Weapons produced by the Taiwanese CSIST, 1980–98 208 viii AR MS P R OC UR EMENT DEC IS ION MAKING Figure 7.1. The organizations involved in security and arms 192 procurement decision making in Taiwan Figure 7.2. Investment outline programme and system analysis process 194 of weapon acquisition in Taiwan Figure 7.3. The organization of the Taiwanese Military Procurement 198 Bureau Figure 7.4. Flow-chart of the military budget process in Taiwan 201 8. Comparative analysis 217 Ravinder Pal Singh I. Introduction 217 II. Military and politico-security issues 217 III. Defence budgets, financial planning and audit 224 IV. Techno-industrial questions 230 V. Organizational behaviour and public-interest issues 235 VI. Good governance, public accountability and secrecy 241 VII. Recommendations for the future 245 VIII. Conclusions 248 Annexe A. Research questions 249 Annexe B. Abstracts of the working papers 269 Annexe C. About the contributors 280 Index 289 Preface This volume is the result of the study conducted as part of the SIPRI Arms Pro- curement Decision Making Project, initiated in 1993 under the leadership of Ravinder Pal Singh. The initial results of the research, covering China, India, Israel, Japan, South Korea and Thailand, were published in the first volume in 1998. In the second and concluding phase of the study, covering six more countries, the scope of the project was broadened somewhat to identify barriers to and oppor- tunities for harmonizing countries’ arms procurement decision-making processes with the requirements of public accountability. This SIPRI project is unique in its exploration of arms procurement decision making at different levels in countries where such issues have not been adequately researched. By drawing on contributions from national experts, it elucidates both national characteristics and a complex range of factors that influence decisions. The military typically has a preference for ambiguity and avoidance of public debate. The authors of the chapters in this volume, while taking a comprehensive view of security decision making, have therefore had a difficult task in analysing the influences of various actors in military security decision-making processes.