In hopes of creating 65,000 jobs and reaping "industrial benefits" of an estimated $17 million according to Finance Minister Alec Erwin, South Africa pledged to spend $5 billion on the upgrade of its military equipment in November of 1998. The deal involving the sale of new warships, submarines, helicopters and jets from Britain, Germany, Sweden and Italy was scheduled to take place over a period of seven years beginning with the first deliveries in 2002. The South African government and Deputy President Thabo Mbeki, when announcing its rearmament decision in November 1998, presented it to the public and taxpayers as being a "done deal." Citizens were expected to applaud the offset program which, supposedly, would bring in huge foreign investments, but of which they were not allowed to know the details because of confidentiality clauses.
A view of the Gripen,one of the principal planes South Africa plans on purchasing, from inside and out.
The economy has been stagnant for over twenty years: indeed, South Africa has been one of the world's economic disaster stories. Apartheid included economic mismanagement of a country endowed with immense natural resources. The value of its currency, the rand, has collapsed from U.S.$1.35 per rand in 1979 to R6 per dollar now. The lure, then, to a government desperate for foreign investments and jobs are offsets offered by European armaments to stimulate the market. South Africans buy warships and warplanes for use against a non-existent foreign enemy and the Europeans will supposedly make massive investments in the country. Unfortunately, international studies show that the costs of offsets are recovered by increasing the prices of weapons being purchased, and that the levels of job creation and technology transfer are generally minimal. Indonesia and Malaysia, for example, were once heavy buyers of Europeans weapons who now face street riots and economies on the verge of disaster.
As of January 1999, the deals seemed less concrete. Campaigns were being mobilized in England and, similarly, in Germany to insist that European governments apply the provisions of the European Union's 1998 Code of Conduct on Arms Exports.
On September 15, 1999 South Africa placed an order for 9 two-seat Gripens
with an option for 19 single-seat Gripens. It signed a contract with
British Aerospace and Saab AB of Sweden for 24 Hawks and 28 Gripens on
December third of the same year. The weapons, worth 15.7
billion rands, are scheduled to begin delivery in 2004 and conclude by
2012. A clause was added to the contract allowing the order to be
cancelled before 2004.