SOUTH AFRICA: DEFENSE STRATEGY IN AN INCREASINGLY HOSTILE WORLD

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83R00184R002600140004-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 36
• Document Creation Date: December 20, 2016
• Document Release Date: September 21, 2007
• Sequence Number: 4
• Publication Date: January 1, 1980
• Content Type: REPORT

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Director of
Central
Intelligence
South Africa: Defense
Strategy in an Increasingly
Hostile World
Interagency Intelligence Memorandum
Annexes A through E
Secret
Secret
NI 11179-10025/A-E
January 1980
Copy 19 J
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SOUTH AFRICA: DEFENSE
STRATEGY IN AN INCREASINGLY
HOSTILE WORLD
ANNEXES A through E
Information available as of December 1979 was
used in the preparation of this memorandum.
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Annex A
Economic Strengths and Vulnerabilities
Introduction and Summary
1. This annex examines South Africa's economic
strategies and capabilities to meet the threat of eco-
nomic sanctions that it has faced for two decades. An
important, albeit unrealistic, assumption is that non-
Communist countries' compliance with sanctions
would be widespread, if not complete. Anything short
of this would effectively eliminate South African
vulnerability.
2. To counter the threat of Western sanctions on
South Africa's foreign trade, investment, and financ-
ing, Pretoria over the years has attempted to:
- Cushion the impact of potential sanctions by in-
creasing domestic self-sufficiency.
- Reduce the threat of sanctions by encouraging
Western dependence on the South African
economy.
While highly successful in limiting dependence on
imports, South Africa still relies to an important extent
on exports of minerals for employment, output, and
foreign exchange. Hence, the country could withstand
an import cutoff for an extended period, but any
large-scale diminution of its exports-whether initi-
ated by the West or by South Africa in retaliation to
an import or investment embargo-would hurt South
Africa perhaps more than the West.
3. South Africa can supply most essential goods and
services from domestic resources. Although heavily
dependent on imports for machinery and some raw
materials such as natural rubber and bauxite, it could
in most cases make up for import losses through
stockpiles, spare capacity in existing industry, and
flexibility in transferring labor and capital. An import
cutoff would be followed initially by a deflation in
demand as Pretoria instituted rationing measures to
husband vulnerable commodities; thereafter, eco-
nomic growth would likely resume because of import
substitution. If South Africa should also lose foreign
investment and loans, its domestic financial resources
would be sufficient to finance the renewal of growth.
4. Over the longer run, the economy would fare less
well. The inefficiencies of short production runs would
push up costs, quality would likely deteriorate, and
South Africa-which tends to adapt rather than inno-
vate-would fall further behind the West in techno-
logical development. The living standards of the white
community would deteriorate, and urban blacks in
particular would suffer, as few job opportunities de-
veloped and prices rose. As in Rhodesia, however, the
slow erosion of living standards could go on
indefinitely.
5. A cessation of South Africa's exports to the West
would have a greater effect on South Africa than
would an import cutoff. South Africa would suffer
through sizable job and output losses. Hence, Pretoria
is unlikely to initiate an across-the-board cutoff of
mineral exports, except in a most extreme case. More
likely, South Africa would decide to exercise leverage-
either by selectively embargoing exports of a few
commodities that are important to the West but of
limited consequence to the South African economy-
such as chrome, manganese, or platinum-or by exert-
ing pressure on neighboring black economies. Many
neighboring countries depend on South Africa for
transportation, trade, and employment, while South
Africa itself would be relatively unaffected if it were
to embargo these areas in retaliation against Western
sanctions.
Strategies and Tactics
6. In the two decades during which South Africa
has felt threatened by economic sanctions on the part
of the West, the government has built strategic stock-
piles and encouraged import substitution. It hoped
thereby to increase domestic self-sufficiency to the
point of being able to sustain an interruption in
imports lasting from several months to more than a
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year. Pretoria also has attempted to reduce the threat
of sanctions by fostering Western and Japanese reli-
ance on the South African economy-particularly on
exports of strategic minerals-and by exploiting the
issue of black African economic dependence on South
Africa. Besides providing protection against sanctions,
import substitution and mineral development have
served as major engines of economic growth.
7. Government policy toward economic self-suffi-
ciency is probably less rational and coordinated than
suggested by the publicity surrounding key programs
such as oil stockpiling and coal liquefaction. Numerous
councils, boards, and government offices are con-
cerned with economic policy, and measures furthering
self-sufficiency often are arrived at more or less
independently rather than as part of a "master plan."
Pretoria nevertheless has a long-established Contin-
gency Planning Board staffed by government depart-
ment heads. Since mid-1978, the board has met regu-
larly with a Cabinet committee to study the problems
of economic self-sufficiency, hold discussions with
private sector representatives, and make recommenda-
tions. The board has conducted a thorough review of
the stragetic stockpiling situation and has updated and
devised new countermeasures against possible sanc-
tions.
8. Expansion of mineral exports and encourage-
ment of foreign economic dependence on South Africa
are less obviously defensive measures than import
substitution or stockpiling, because they follow a well-
trodden path toward economic development and
growth. Nevertheless, oft-repeated official statements
expressing doubt about the West's willingness and
ability to implement sanctions indicate the signifi-
cance that Pretoria places on its role as a reliable
supplier of minerals that are nonexistent or in short
supply in the West.
Stockpiling
9. Pretoria has sunk an estimated $2 billion into
building and maintaining nonmilitary strategic stock-
piles. Oil stockpiling, funded through a special Strate-
gic Oil Fund based partially on tax revenues from
retail fuel sales, has accounted for 80 to 90 percent of
the outlays. Roughly $100 million has been allocated
by Parliament since 1970 for stockpiling strategic
commodities other than oil through the National Sup-
plies Procurement Board (NSPB) headed by the Secre-
tary of Industries. Unknown additional amounts un-
doubtedly have been spent from budget categories
outside the NSPB account and from unreported extra-
budgetary allocations.
10. During the 1970s, South Africa stockpiled an
estimated 100 million barrels of oil in abandoned coal
mines' in the Witbank area. At 1978 rates of consump-
tion (320,000 barrels per day), these stockpiles, plus an
additional 50 million barrels stored aboveground by
refineries, would last almost 16 months.' Rationing,
which would restrict nonessential transportation,
would extend stores even longer.
11. Data on size, composition, and quality of stock-
piles of individual nonoil items are unavailable. Major
government-owned corporations such as the South
African Post Office (which operates the telephone and
telecommunications systems), the Electricity Supply
Commission (ESCOM), and the South African Rail-
ways and Harbors Administration (SAR) reportedly
have substantial stores. An estimate by a private South
African firm puts at about one year's consumption
total governmental stocks of spare parts and other
items considered critical to industry and commerce.
Regular nonstrategic commercial and industrial inven-
tories add to the stockpile cushion, varying in size with
the ups and downs of the business cycle.
Import Substitution
12. Even more important for long-term self-suffi-
ciency is the government's program of import substitu-
tion, which, rather than creating a semipermanent,
self-contained system, aims at keeping the damage
from any import cutoff within tolerable limits. Besides
the government's own large programs, private enter-
prise freely uses self-sufficiency as a lever to acquire
public funds and protection for new ventures and for
old ones that have become uncompetitive with im-
ports. Pretoria's ready willingness to respond to this
arm twisting indicates the high premium it places on
achieving self-sufficiency and on maintaining living
standards at the high level to which the white popula-
tion is accustomed.
13. To reduce dependence on imports, the govern-
ment employs a wide range of tactics, including
financing, constructing, and operating key industries;
setting local content requirements; and instituting
tariff, quota, and licensing measures. Specifically:
- Government interests in key projects are served
through the publicly owned Industrial Develop-
' Some reports indicate that countrywide stockpiles would last
from 24 to 36 months with strict conservation and rationing.
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ment Corporation or special government corpo-
rations, which control production in key sectors
such as iron and steel, communications, oil,
uranium, and armaments.
- Stiff local-content requirements are applied to
the automobile industry, where they have been
raised in four successive stages since 1962, to 66
percent by weight across the average of all makes
of cars. In January 1980, these requirements for
cars as well as for light commercial trucks will be
further tightened. Penalties in the form of sales
taxes are applied to discourage violations. Out-
side the automobile industry, local-content rules
are less specific; they are generally expressed as
goals and are aided by import protection and
direct government investment.
- Import protection includes tariffs exceeding 30
percent, on critical capital goods such as lathes
and 20 percent on such common domestic appli-
ances as dishwashers and vacuum cleaners. Im-
port permits are issued selectively; for example,
Pretoria will not issue permits for those grades of
denim produced domestically.
14. Less directly, the government furthers self-suf-
ficiency by attracting foreign capital, technology, and
managerial skills. For instance, South Africa would
have had a difficult time undertaking key self-suffi-
ciency projects such as the SASOL II coal liquefaction
plant,, the Koeburg nuclear power plant, and the
Coalplex and Sentrachem chemical complexes without
major foreign inputs. Pretoria has put controls on
capital repatriation, and the 1970 National Supplies
Procurement Act allows for expropriation for national
security reasons. Nevertheless, profits, interest, and
dividends are freely remittable, and local participation
in foreign ventures is not mandatory except in bank-
ing, where foreign equity is limited to 50 percent.
Increasing Western Dependence
15. Attracting foreign capital and investment raises
the West's stake in South Africa-a policy Pretoria
also has pursued in the area of mineral exports to
reduce the threat of sanctions. As in import substitu-
tion, the government has encouraged mineral export
2 Planned to be in production by 1980, SASOL II will produce an
estimated 40,000 barrels a day of gasoline, diesel fuel, jet fuel,
kerosene, and liquefied petroleum gas, and about 10,000 b/d of
downstream products such as ethyl and other petrochemical feed-
stocks. This output will enable South Africa to reduce imports by
about 23 percent.
expansion through (a) direct public investment in the
development, sale, and shipment of minerals and (b)
tax relief and financial incentives such as an automatic
10-percent bonus to producers on the value-added on
exports to encourage private export ventures.
Economic Strengths
16. South Africa's strategies for countering the
threat of sanctions have paid off to a considerable
degree. Although far from invulnerable to a potential
cutoff of foreign economic relations (see table A-1),
the country does have the ability to produce adequate
supplies of essential goods and services from domestic
resources, with stockpiles helping to fill the few gaps.
Equally important, Western dependence on South
African mineral exports and, to a much lesser extent,
Western financial ties to South Africa give Pretoria
important leverage over policy in the United States
and Western Europe. Finally, Pretoria's ability to
impair the economic health of neighboring black
countries also serves as a deterrent to sanctions.
Production Capacity
17. South Africa could meet its basic needs in food,
clothing, housing, and medical care for an indefinite
period, while continuing to supply many of the pre-
requisites of high white living standards such as good
wines and modern furniture. With some exceptions,
stockpiles, spare capacity in existing industries, and
flexibility in transferring labor and capital would see
the economy through for three or four years. A cutoff
of the critical exceptions-capital equipment, machin-
ery, and oil-would limit or end economic growth
over time.
18. South Africa is self-sufficient in most basic food
production and processing, with agricultural imports
accounting for only 4 percent of domestic consump-
tion. Agriculture is widely varied, producing surpluses
for export of beef, mutton, poultry, eggs, corn, wheat,
sorghum, potatoes, citrus and deciduous fruit, sub-
tropical fruits, grapes, sugar, cotton, and oilseeds.
White farmers generally use modern methods, and
yields and output per unit of labor compare favorably
with those in countries similar in climate. About half
of the fish catch is exported, and domestic fish market-
ing (which has been neglected) could be expanded to
provide variety and protein. For many of the few
products South Africa now imports in sizable quanti-
ties, plentiful substitutes of equal nutritional value
exist; corn and wheat, for example, could easily re-
place rice losses. Of the remaining products that are
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South Africa: Imports as a Percentage of Domestic Consumption
Raw Materials
Agriculture, forestry, and fishing
Mining, of which:
Gold and uranium
Coal
Negl. Negl. Negl. Negl.
Negl. Negl. 0.6 0.5
Other b
4.2
Intermediate Products
Textiles
37.
3
30.3
24.2
22.0
Leather and leather products
56.
8
31.9
15.8
12.0
Wood and wood products
21.
4
25.5
17.3
16.0
Industrial chemicals c
44.
9
28.6
25.0
19.0
Iron and steel
11.
9
15.3
20.8
15.0
Nonferrous metals
6.7
9.4
9.0 15.
2
Finished goods
Processed foodstuffs
7.7
8.3
6.5
6.0
Beverages and tobacco
8.7
3.1
5.2
5.0
Clothing
8.3
7.3
7.0 14.
8
Footwear
8.8
10.1
10.4
11.0
Paper and paper products
24.
5
23.7
19.1
18.0
Products of printing, publishing, and allied
industries
7.9
10.0
10.0
23.2
Furniture
3.8
2.8
3.4
4.0
Plastic products
9.4
6.0
4.0 18.
4
Pharmaceuticals and cosmetics
12.
8
15.4
12.7
12.0
Other chemical products
37.
5
20.0
22.3
23.0
Rubber products
17.
6
13.3
14.0
Metal products
13.
1
10.3
14.1
14.0
Nonelectrical machinery
36.
1
65.3
64.9
64.0
Electrical machinery
35.
2
39.3
43.2
42.0
Motor vehicles and parts
47.
4
40.5
44.0
43.0
Transport equipment
31.
9
35.8
38.1
37.0
Nonmetallic mineral products
8.6
9.4
10.0
10.3
Building and construction products
0.3
0.3
0.4
0.4
Miscellaneous manufactures
Services
Electricity, gas, steam, and water
0
0
0
3.0
Domestic trade
0
0
0
0
Transport, storage, and communication
8.0
Miscellaneous services
4.2
4.7
4.9
5.0
a Estimated.
b includes most refining of nonferrous metals.
c Includes the petroleum and coal products industry.
largely imported-coffee, cocoa, hard liquor, and
natural rubber-only the loss of natural rubber would
be potentially damaging, since synthetic rubber cannot
substitute for natural rubber in heavy truck tires
because it cannot withstand the high heat buildup over
long-distance runs.
19. In the important area of basic metals, South
Africa imports less than 15 percent of domestic con-
sumption. In particular, the iron and steel industry,
which is based entirely on domestic iron ore deposits,
is well diversified, supplying nearly all domestic needs.
(See table A-2.) In 1978, steel output totaled 7.7
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South Africa: Steel Products Produced Domestically
Rounds V
Squares V
Flats V
Equal angles V
Unequal angles V
Channels V
T-bars V
Universal sections -
Rails V
Plates V
Floor Plates V
Sheets V
Wire V
Wire rod V
Corrugated sheet V
Window sections V
V V V
V V V
V V V
V V V
V V V
- V V
* South Africa has four major steel producers: the South African Iron and Steel Corporation (ISCOR),
Dunswart Iron and Steel Corporation, Highveld Steel and Vanadium Corporation, and Union Steel
Corporation (USCO).
million tons, of which 1.5 million tons were exported.
Only about 100,000 tons were imported, almost all
high-carbon and alloy specialty steels. Although cur-
rently not producing these steels-which are used in
specialty applications such as the blooms for the shafts
of the turbine generators at Koeburg-South Africa
probably has the technical knowledge to manufacture
them, albeit at high cost and reduced quality.
20. Even in the weakest areas of basic metals-
aluminum and lead-the gaps are small. Although
South Africa does not currently mine bauxite, alumi-
num requirements are small, with annual per capita
consumption of only 3.1 kilograms (as compared with
21 kilograms in the United States). In any event,
aluminum most likely is heavily stockpiled, other
metals are workable substitutes for most applications,
and bauxite deposits in Natal are being evaluated.
Lead, which is now mined in Namibia, is largely
recycled from used batteries and it may soon be
produced from deposits in the Northwest Cape region.
21. South Africa is also relatively invulnerable in
the field of chemical production. It turns out practic-
ally all of the basic chemicals required by local
industry, including synthetic rubber, synthetic fibers,
and the five major polymers that form the rudiments
of plastics requirements. Now being produced from
coal at the country's new Coalplex plant, these poly-
mers require less than 5 percent of total oil imports.
Gaps in chemical production such as analine and
rayon are well known and in some cases probably
heavily stockpiled; in other cases, the domestic capac-
ity to expand production exists but has not been
utilized because of stiff competition from high-vol-
unte, higher quality overseas producers.
22. In other categories of manufactured goods, prog-
ress has perhaps been most notable in the textile
industry, which has steadily increased the range of raw
material and finished products fabricated at home.
Long a producer of wool and cotton, South Africa now
also manufactures nylon and polyester. Local industry
has expanded from clothing production to a wide
range of industrial applications such as belting for
conveyers, carpeting, belting and woven fabrics for
tires, and ropes, twines, bags, and sacks..
Technological Capabilities
23. South Africa's strengths in technology lie largely
in copying and developing foreign designs to meet
local conditions and-for most industries-in high
standards of maintenance and operation of equip-
ment. Key areas where South Africa is recognized
among world leaders in technological development
include underground mining-particularly shaft sink-
ing, ventilation and pumping techniques, and deep
mine operations-and coal liquefaction. South Africa
also has developed and applied advanced techniques
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and materials in the refining of minerals, including the
use of superior flotation reagents and other methods
developed by local chemical and engineering compa-
nies working closely with major mining concerns.
24. Recognizing its technological gaps, South Africa
established the Council for Scientific and Industrial
Research (CSIR) in 1945 with a broad mandate to
train research and technical staff, support university
and other research, and provide library and informa-
tion services. Research under CSIR auspices covers
most sectors of the economy, from food and nutrition
to oceanography. Under sanctions, the CSIR would
represent an important reservoir of knowledge and
talent to help reduce costs and improve feasibility of
short production runs, although major scientific break-
throughs and applications would be unlikely.
25. As a principal source of a number of essential
minerals, South Africa can exercise leverage over the
West and Japan. (See figure A-1.) Whether as a result
of sanctions applied to exports or of South African
retaliation to import sanctions, a cutoff for several
years of South African supplies-particularly of chro-
mium, manganese, platinum group metals, and vana-
dium-would cause shortages on world markets, push
up mineral prices sharply, and force the Free World
into the use of substitutes and mineral supplies from
the Soviet Union.
26. Pretoria is a major force in the world mineral
supply situation, because:
- South Africa accounts for more than 50 percent
of non-Communist production of platinum group
metals, gold, and vanadium and 30 percent or
more of chromium, manganese, and antimony.
- South Africa is the world's third largest producer
of uranium, of which it is rapidly increasing
output and exports.
- The country produces about half of the dia-
monds sold to the international producers' associ-
ation (the Central Selling Organization) con-
trolled by DeBeers Consolidated Mines, Ltd.; the
association handles about 80 percent of annual
world diamond sales.
- South African gold sales dominate the supply of
the international gold market; output is more
than double that of the USSR, the world's sec-
ond-ranking producer.
27. In addition, the importance of South African
ferroalloys of chrome and manganese has grown rap-
idly in the 1970s. Because of the cost advantages of
building alloying plants near mine sites, South Africa
has been able to undercut the established alloying
industries of the developed nations. Of the major steel-
producing countries, only Japan and West Germany
produced more ferroalloys in 1976 (the latest year for
which complete data are available) than in 1970. Over
the same period, South African output increased by 92
percent, then jumped another 14 percent in 1977. The
dependence of the industrial countries on South Afri-
can alloys grew accordingly.
28. South African mineral exports are of major
importance to the United States, as well as to Japan
and Western Europe. Lacking commercial deposits of
chromium, manganese, diamonds, and the platinum
group metals, the United States must import all re-
quirements as well as 40 percent of its vanadium and
antimony needs. South Africa supplies some one-third
or more of US imports of these minerals; in the case of
platinum group metals it supplies three quarters of US
imports. Repeal of the Byrd Amendment effectively
ended US chromium imports from Rhodesia, and US
dependence on South Africa for supplies of chromium
ore and ferrochrome has increased to about 50 percent
of needs. The United States could turn to its strategic
stockpiles of minerals to cushion the impact of an
embargo for a year or more, but in the longer run
would find it difficult to endure a cutoff of South
African supplies.
29. There are few alternatives to South African
mineral exports. (See table A-3.) The USSR is almost
the only other supplier for the platinum group metals
and is a major producer of gold, industrial diamonds,
high-grade chromium ore, manganese, and vanadium.
Unlike South Africa, the USSR itself is a major con-
sumer of these minerals and probably could increase
the present level of exports only a little. Moreover, the
USSR would increase prices sharply as scarcities devel-
oped just as it increased chromium ore prices follow-
ing the UN embargo against Rhodesia.
30. Non-Communist sources could expand produc-
tion of manganese and vanadium, although it would
take years to make up the loss of South African
exports. (Major manganese producers are Gabon, Bra-
zil, Austria, India, and the United States; vanadium is
produced by Finland, Norway, Chile, and the United
States.) Output of chromium ore and the platinum
group metals by non-Communist suppliers could sim-
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South Africa: Figure A-1
Exports of Critical Minerals as Share of Consumption in Major Countries
US Japan
Antimony
Industrial
Diamonds
Manganese
Uranium b /
a. Includes ores and metal
b. Estimated.
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South Africa: Importance of Principal Minerals
Percentage of
Free World
Percentage of
Antimony (metric tons)
15,800
29
21 Bolivia (18), Ch
ina (14), USSR (10)
Chrome (metric tons)
3,200,000
53
30 USSR (33), Alba
nia (10), Rhodesia (6)
Gold (troy ounces)
22,900,000
73
56 USSR (22), Can
ada (4), US (2)
Industrial diamonds (carats)
4,500,000
21
15 Zaire (37), USS
R (27), Ghana (7), Botswana (8)
Manganese (metric tons)
4,200,000
35
19 USSR (45), Gab
on (10), Brazil (8)
Platinum group metals
ounces)
(troy
2,950,000
87
46 USSR (47), Can
ada (6)
Vanadium (metric tons)
11,250
56
39 United States (1
6), USSR (31)
Uranium U30, (metric tons)
4,500
13
? United States, C
anada, Niger, USSR, Namibia
ply not be increased enough to offset South African
losses, even in the longer term. Non-South African
uranium supplies are now adequate to meet demand,
but, if world requirements grow at projected rates,
South African uranium production will be essential to
meet increased European demand in the 1980s.
31. The loss of South African supplies of chromium,
manganese, and vanadium would have a serious im-
pact on the steel industries of the non-Communist
countries, particularly on the output of specialty and
high-temperature steels used in aircraft, missile, space,
and other defense-related programs. While substitutes
could be used, the costs would be high and in many
cases there would be a loss in performance characteris-
tics. Moreover, increased demand would cause short-
ages of the substitutes, pushing up costs even more.
32. Curtailment of the platinum group metals
would effectively end the US automotive catalyst
program for pollution control. Requirements for the
platinum metals in automobile converters will continue
to be high for many years before recovery from
discarded units will become an important source of
supply. The loss of South African platinum will have a
much smaller effect on the petroleum industry be-
cause recovery of the platinum catalyst in this area is
almost total; new refinery capacity, however, would
be inhibited without foreign platinum.
33. The loss of industrial diamonds would have the
greatest impact on metalworking industries, machin-
ery and transportation equipment, and construction.
Although alternative producers such as Zaire could
help supply Western countries, the cost would be
greater. Some forms of industrial diamonds can be
produced synthetically, but the wonderstone from
which they are made is also imported from South
Africa. In any event, the cost of diamond substitutes is
high, and they are less efficient.
34. Gold from South Africa serves on international
markets as a limited alternative to speculation in
currencies and as an important noncommercial metal
consumed in the production of jewelry and electronics
and in dentistry. A sharp reduction in South African
gold sales would drive up gold prices sharply. While
initially such an action might cause a flurry on world
money markets, gold plays a relatively small role in
the international monetary system. Over time, some
impact might be felt on exchange rates, reflecting
differences in the share of gold in official reserves
among countries.
Foreign Capital and Debt
35. South Africa could also exert limited influence
over Western policy through threats of nationalization
of foreign assets, blocking profit and dividend remit-
tances, and freezing repayments of principal and
interest on foreign debt. The impact of such actions on
any single country would be moderate. In the case of
the United Kingdom-the largest foreign investor in
the country-South African assets represent 10 per-
cent of direct foreign investments and 2 percent of
foreign currency loans. The impact, of course, would
be much more severe on individual companies and
banks.
36. Cumulative direct foreign investment in South
Africa amounted to $10 billion at the end of 1977. (See
figure A-2.) British holdings accounted for more than
half, including much of the investment in chemicals,
textiles, motor vehicles, banking, and capital goods
output. South African statistics indicated that US
investment was $2 billion at yearend 1977, half of
which was in manufacturing.
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South Africa:
Direct Foreign Investment, 1977
Economic Weaknesses
39. Despite South Africa's ability to meet basic
requirements, loss of foreign trade, investment, and
financing would appreciably reduce the living stand-
ards of the white population and would severely
worsen joblessness and poverty among urban blacks.
Shortages would quickly appear in supplies of consumer
goods such as coffee, fuel for pleasure driving, up-to-
date styling in clothing, and new automobiles. Over
time, capital goods shortages would become acute.
Finally, the economy in its struggle to keep up with
technological progress would fall further behind.
No
North
America*
European
Economic
Community
37. South African investments have been highly
profitable in recent years, often yielding up to an 18-
percent return on capital. Expropriation would be a
significant loss to banking and multinational firms,
although the loss to any given country would be
moderate.
38. South Africa is heavily indebted to foreign
countries through commercial bank borrowing and
portfolio investment. Liabilities to private foreign
lenders and holders of portfolio investment more than
doubled between 1973 and 1977, to $14.5 billion. Most
has been used for funding large energy projects such as
SASOL II and the Koeburg nuclear power reactors and
for transportation upgrading and expansion to handle
rising mineral exports. Principal lenders have been
large international banks in the United States, Britain,
West Germany, Switzerland, France, and the Benelux
countries.
40. Despite two decades of high-priority attention
and substantial progress in selected industries, South
Africa's import substitution drive has not freed the
economy from heavy dependence on foreign capital
equipment and machinery. In some capital goods
industries, imports account for an even higher share of
domestic consumption today than at the start of the
1970s. In contrast to other industries, spare domestic
capacity is not available for the production of most
capital goods. Although facilities to produce a large
variety could be constructed and put into operation
over a period of three to four years, there would be a
sharp reduction in quantity and quality of products,
which would cost much more.
41. Capital goods predominate in four out of five
sectors in which imports account for 40 percent or
more of domestic consumption. Import dependency is
particularly high in the following areas:
- Nonelectrical machinery: industrial engines and
turbines.
- Electrical machinery: electrical generators, mo-
tors, transformers, switching gear, and insulated
wires and cables.
- Heavy transport equipment: heavy or specialized
trucks for mining or defense, agricultural and
construction tractors, railroad traction and rolling
stock, commercial airliners, and specialized ships
for container transport or defense.
- Motor vehicles and parts: major components for
the assembly or repair of automobiles and com-
mercial trucks such as engines, transmissions, and
other drivetrain parts.
42. This lack of progress reflects a low level of
technological innovation and the limitations imposed
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by South Africa's small domestic market. With short
production runs, South African producers are denied
the economies of scale enjoyed by high-volume foreign
producers, forcing increased unit costs which must be
offset by government subsidies or passed through in
the form of higher prices. In this situation, investors
are reluctant to sink money into expansion, particularly
of high-cost items that are certain to be uncompetitive
with overseas products.
Technological Gaps
43. Except for underground mining and coal lique-
faction, there are few machines, techniques, or ad-
vanced developments that are uniquely South African.
Development efforts have been focused on improving
and adapting foreign processes to local conditions
rather than on pure scientific research. With the
exception of nuclear enrichment, no major technologi-
cal breakthroughs can be ascribed to South African
research and development.
44. Ironically, imported technology has been the
key to several important self-sufficiency projects:
- Recent acquisitions of giant multimillion-dollar
Bucyrus Erie earth shovels, Euclid 170-ton-
capacity trucks and Caterpillar bulldozers (all of
US origin) are critical for the operation of new
open-pit mines in South Africa and for South
African-controlled uranium and diamond mines
in Namibia.
- West European interests such as Hoechst (West
Germany), Shell (the Netherlands), and Distillers
Corporation (United Kingdom) were heavily in-
volved in the financing, design, and construction
of the Sentrachem complex, which is now the
only local producer of synthetic rubber, phthalic
anhyride, soft detergent alkylate, high-density
polyethylene, and agricultural herbicides.
- The $265 million Coalplex complex (essentially
producing plastics from coal) depended almost
exclusively on foreign design and construction
for the two 33-megawatt furnaces that form the
heart of the carbide plant (Ellson of Norway),
the acetylene plant (Udhe of West Germany),
the diaphragm electrolyte cells for chlorine pro-
duction (Diamond Shamrock of the United
States), and the vinyl chloride monomer plant
(Crawford and Russel of the Netherlands).
- The $2.9 billion SASOL II coal liquefaction plant
is dependent on the Fluor Corporation of the
United States for contract management; on three
West German firms (Deutsche Babcock, Lurgi,
and Linde) for power stations, gasifiers, and
product recovery facilities; on Air Liquide of
France for oxygen units; and on Badger Incorpo-
rated of the United States for gas purifiers.
- The nuclear power plants at Koeburg are con-
tracted to a consortium of French firms, includ-
ing Framatome for the reactors, Framateg for
project management, Alsthom for turbine gener-
ators, and Spie Batignolles for civil engineering.
A US firm was appointed to monitor the quality
standards of the French performance. In addi-
tion, South Africa relies almost exclusively on
foreign technology for electronics. Companies
such as IBM and Burroughs (United States),
International Computers, Ltd. (United King-
dom), and Siemens (West Germany) market and
service computers and advanced communica-
tions gear. The four small local companies mak-
ing electronic components are licensed by for-
eign firms.
45. Overall, payments for foreign technology far
outweigh domestic research and development outlays.
For instance, in the finished goods manufacturing
sector, payments for imported technology run some
$60 million a year (half in license and royalties and
half for technical services), roughly four times the
amount spent on domestic research and development
in the sector. In total South Africa devotes only 0.5
percent of its gross national product to R&D, as
compared with up to 2.5 percent of GNP in the West,
and much of this is concentrated in defense and in
investment.
Manpower Vulnerabilities
46. A major impediment to reduced technological
dependence on the West is the small domestic pool of
qualified personnel-a limitation also found in the
areas of management and skilled labor. South Africa
has a good higher-level technical training system for
whites, but, in proportion to its entire population,
white and nonwhite, the educational system does not
produce as many graduates in scientific and technical
fields as most Western countries. Scientific and techni-
cal training for nonwhites remains limited, although
increasing opportunities for advanced training are
being opened to them as the country's skilled man-
power shortage worsens. The quality of advanced
scientific and technical training has been hurt by the
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same apartheid policies that are present in other
sectors of society. Faculties at universities and ad-
vanced technical colleges have been weakened by the
emigration of faculty members who object to apart-
heid as well as by the difficulties apartheid imposes on
efforts to hire replacements from overseas.
47. For whites, engineering courses are offered at
seven of the 10 universities; nuclear science is offered
at three; and mining, metallurgy, and geology at three.
Because the country's economy is so heavily based on
minerals extraction, mining and metallurgy curricu-
lums are particularly strong. In addition to the scienti-
fic and technical curriculums offered at the universi-
ties, South Africa has a strong advanced technical
education program for whites at other secondary
institutions. There are six "colleges for advanced tech-
nical education" which are, in effect, technical univer-
sities designed to train students for supervisory or
management positions. They undertake some scientific
research, often in collaboration with local industries to
solve specific problems. There are also 27 technical
colleges and 34 technical institutes. Combined, the
technical institutions train students in all scientific,
technical business, and commercial fields. They work
particularly closely with the big mining corporations
to train their officials.
48. Advanced technical education for blacks is of-
fered at only two colleges, in Lebowa and in Kwazulu.
There are, in addition, four universities for blacks and
one each for Coloreds and Asians, but they offer few
advanced courses in scientific and technical fields. A
new black university in Bophuthatswana does have
faculties in medicine, dentistry, and veterinary medi-
cine. Several thousand nonwhites attend the "open"
white universities for engineering, medicine, and other
scientific and technical fields of study, but the vast
majority attend the University of South Africa, a
correspondence school that is open to all races.
49. The apartheid system also reduces the available
pool of domestic managers and skilled laborers, forcing
South Africa to depend heavily on foreign manage-
ment and training to run its economy. The low pay of
top executives relative to that offered overseas creates
a brain drain and adds to domestic shortages. Top pay
in South African non-family-owned businesses runs
from $70,000 to $90,000 a year; affiliates of multi-
nationals pay $100,000 to $200,000, while executives
in the United States and Western Europe command
$500,000 a year or more.
50. Besides managers, South Africa also lacks shop
foremen and firstline supervisors. In the textile sector,
for instance, companies often send workers overseas
for advanced technical training, only to have them
hired away by foreign textile concerns. Major break-
downs of machinery often must be repaired by foreign
technicians. Although textile companies have substan-
tial training and apprenticeship programs, progress has
been slow so far. One problem is that the industry has
trouble attracting whites or persons of mixed blood to
shop-floor positions, and blacks have not been pro-
vided with enough education to help them cope with
the demands of technical and scientific training.
51. Recognizing domestic gaps, the government for
more than a decade counted on 30,000 to 40,000 white
immigrants annually to fill the managerial, technical,
and skilled labor gap. In 1977-78, however, net migra-
tion turned negative, with the greatest losses coming
from the professional ranks. South Africa also has
given construction contracts on large plants requiring
sophisticated management to foreign concerns, even
when the technology has been well known in South
Africa (as in the case of SASOL II). Finally, govern-
ment contracts with foreign firms for technologically
advanced plant and equipment, such as the Koeburg
nuclear power plant and the Post Office's computer-
ized telecommunications system, include requirements
for training of local personnel in management and
operation.
Foreign Investment and Financing
52. While foreign direct investment and lending
give Pretoria leverage over the West, the foreign
presence is also important for South Africa's economic
growth. This is because:
- Foreign investment accounts for almost 10 per-
cent of South Africa's capital stock and is a major
determinant of output and employment. Foreign
companies are prominent in almost every sector
of the economy.
- Net inflows of direct foreign investment aver-
aged $650 million a year in 1970-78, or 9 percent
of South African fixed capital investment. While
the ups and downs of these inflows are not
closely correlated with swings in economic
growth, direct investment is an important supple-
ment to domestic financing. In addition, the
retained earnings of foreign affiliates probably
account for another 3 to 4 percent of domestic
capital formation.
- Private international bank claims on South Africa
tripled in 1975-78 to more than $8 billion; these
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inflows helped sustain a higher rate of imports
than would otherwise have been possible.
Minerals as a Double-Edged Sword
53. While critically important to the West, exports
of strategic minerals are essential for South African
economic growth as well. Minerals and mineral
products are the backbone of South African trade,
accounting for more than 60 percent of export value.
Mining alone accounts for 16 percent of local employ-
ment, 12 percent of national output, and the bulk of
foreign exchange earnings; processing, refining, and
transportation provide many jobs and considerable
output.
54. The impact of an export cutoff on employment
would be particularly harsh. (See figure A-3.) The
700,000 mining workers are the breadwinners of
families numbering nearly 3 million persons. About 90
percent of the mining employees are black, although
blacks absorb only about one-half of the wages and
salaries paid in the sector. South Africa would simply
not have the financial resources needed to subsidize or
stockpile mineral production to maintain employment.
About 450,000 black migrants from neighboring coun-
tries (principally Lesotho, Mozambique, Botswana,
Swaziland, and Malawi) would also be adversely
affected by a cutback in mining output.
The Bottom Line on Self-Sufficiency
55. South Africa has achieved its key self-sufficiency
objective-the ability to sustain partial or complete
import cutoffs for more than a year. Except for major
items of capital goods and machinery, the obvious gaps
in local production-oil, bauxite, natural rubber-
undoubtedly could be filled from stockpiles for some
time. In the short run, even the loss of capital imports
would not substantially undermine economic well-
being because of South Africa's ability to overhaul and
repair existing equipment. In a situation that would be
perceived as little short of war, loss of the numerous
commodities that contribute to the high white stand-
ard of living-coffee, rice, hard liquor-would not
create undue unrest.
56. While sanctions would not irreparably harm the
South African economy, their initial impact would
undoubtedly deflate demand. Not only would con-
sumer and investor confidence sag, but, to stretch out
stockpiles, rationing would have to be imposed on
those items that are not produced locally. The contrac-
tion would probably be followed by a spurt of eco-
nomic growth, which could last for several years, as
domestic firms-protected from foreign competition
by sanctions-moved into high-cost, low-volume pro-
duction of important embargoed goods and services.
Even if an import embargo were accompanied by a
ban on investment and lending, plentiful funds to
finance the growth surge would be available from
retained earnings and other domestic sources-and
possibly from the blocked profits and dividends owed
to the parent companies of foreign affiliates.
57. Over the longer run, the loss of access to foreign
capital equipment and machinery, technology, man-
agement, and skills would lead to a gradual erosion of
living standards. The quality of life would slip for
whites. Blacks on the lower end of urban industrial life
would be severely hurt by insufficient job opportuni-
ties, requiring a growing program of welfare aid to
maintain urban subsistence. Over time, the inefficien-
cies of subsidizing a mounting number of unemployed
and of maintaining a high-cost industrial sector would
further erode living standards.
Leverage Against the West
58. Although its mineral exports give it a powerful
weapon to retaliate against sanctions, South Africa
would be very reluctant to use this weapon. While
economies in the West and Japan would experience
skyrocketing prices for key minerals, an export cutoff
would lead to deep cuts in South African employment,
income, and output-particularly if the cutoff in-
volved gold, diamonds, and coal. Because the hard-
ships that would be involved could spark civil unrest,
particularly among blacks, Pretoria would have to be
virtually certain of public support for a cutoff and
fully confident of its ability to control dissidence
before proceeding. In any event, in order to moderate
the domestic impact, South Africa seems more likely
to opt for a cutoff of only a few key minerals.
59. Pretoria would be less hesitant to exercise its
leverage over neighboring black countries in retali-
ation against sanctions. The loss of transportation,
trade, and labor that this would entail would seriously
impair nearby economies but would have only a small
impact on South Africa itself.
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South Africa:
Employment in Mining, 1978*
White I Other
39,920
Quarry Products 2.0
783 8,135
Manganese 1.4
Chrome 1.9
Diamonds 2.9
Q
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Gold
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Annex B
Attitudes of Major European States
Toward Sanctions on South Africa
1. The major West European governments would
be extremely reluctant to impose meaningful eco-
nomic sanctions on South Africa. Fear of the domestic
economic impact of sanctions, as well as skepticism
concerning their effectiveness in changing South
African policies, keeps most governments from impos-
ing a trade embargo or a ban on investment. The
possibility that other countries would increase trade
and investment at the expense of countries honoring
sanctions militates strongly against their adoption.
2. The United Kingdom, with the most extensive
ties to South Africa, is the most staunchly opposed to
sanctions, on both political and practical grounds. In a
debate on 25 May 1979 in the House of Commons,
Minister of State for Trade Cecil Parkinson outlined
the Conservative government's opposition to economic
measures against the republic. Parkinson stated that
"civil trade should be determined by commercial
considerations, not by the character of the govern-
ments." He went on to say that foreign investment is
needed for South African growth, which he regards as
the best hope for peaceful change and a source of
better economic conditions for black South Africans.
3. Because London views sanctions as a threat to the
health of the British economy, the Thatcher govern-
ment has said that it would not yield to pressure to
impose them. Although South Africa accounts for only
2 percent of British exports and imports, the value of
British direct investment in South Africa exceeds $9
billion-about 10 percent of the total UK direct
investment overseas. Another $7 billion in indirect
investment has also been placed in South Africa by
Britons. Disruption of the economic relationship could
cost the United Kingdom 70,000 to 200,000 jobs,
depending on multiplier effects. The steel and other
metals industries, which rely on South African ores,
would be particularly hard hit by an abrupt trade
cutoff.
4. The opposition Labor Party dislikes sanctions
almost as much as the Conservative Party. While the
Labor Party does not view trade with South Africa as
morally neutral, it is even more sensitive than the
Conservative Party about the potential loss of jobs,
which would affect primarily the blue-collar workers
who constitute the base of its support. When the Labor
Party was in office, some ministers said publicly that
the South Africans would circumvent sanctions by
buying goods elsewhere, leaving Britain to pay the
economic price without getting any results.
5. France is likely to drag its heels on imposing
sanctions, particularly those directed against specific
sectors such as air transport, food products, and oil
trade. If all countries could agree, Paris would prefer
broad-scope sanctions that would include removal of
incentives for trade, elimination of aids to investment,
and prohibition on transfers of capital. The French
believe that these measures would be less discrimina-
tory among South Africa's various trading partners.
Paris would not even consider sanctions against high-
technology goods like nuclear equipment unless these
were part of a framework of general economic
sanctions.
6. Italy probably would avoid taking an independ-
ent position, waiting for its partners in the European
Community to reach a consensus. In the absence of an
agreement binding the European Community, Rome
would be likely to follow France's lead.
7. West Germany, like the other major West Euro-
pean countries, would be wary of any sanctions having
real teeth. Chancellor Helmut Schmidt believes that
the West Germans should be free to pursue their
economic interests in South Africa unless all the
Western countries agree to unified action. South
Africa now accounts for 1 percent of West German
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exports and imports, and more than 300 enterprises in
South Africa are German owned. Schmidt would be
reluctant to hand an issue for the upcoming election to
the opposition coalition of Christian Democrats and
Christian Socialists; its flamboyant leader, Franz Josef
Strauss, could be expected to denounce the effects of
sanctions on the 20,000 ethnic Germans in Namibia
and on the West German economy.
8. The reliance of black African states on South
Africa for trade and transport contributes to West
European reservations about sanctions. Botswana, Le-
sotho, Swaziland, Mozambique, Malawi, Zambia, and
Zaire all have vital economic relations with South
Africa. By cutting off food, fertilizer, machinery, or oil
shipments to these countries, or stopping export trans-
shipments through South African ports, Pretoria would
leave these nations with little choice but to call on the
West for costly rescue operations.
9. There is nonetheless a measure of ambiguity in
the European attitude toward sanctions. France in
particular would find it awkward to oppose sanctions
explicitly, because of its large interests in West and
Central Africa. Other countries may also face some
domestic political pressures, especially from the left, if
they appear to obstruct international sanctions against
apartheid. Most public European concern, however,
has indeed focused on measures consistent with contin-
ued economic ties with South Africa-for example,
the European Community's code of conduct for firms
operating there.
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South Africa's Regional Policy:
The "Constellation" of Southern African States
The Current Setting: South Africa's Leverage
1. South Africa's economic leverage in southern
Africa varies in degree from country to country. The
most dependent countries in the region are Namibia,
Rhodesia, and the B-L-S states-Botswana, Lesotho,
and Swaziland. Zambia, Malawi, Mozambique, and
Zaire rely on South Africa in specific but crucial
respects, while Angola's economy is largely independ-
ent of the republic's.
2. Namibia, also known as South-West Africa, is a
former German colony that was given to South Africa
by the League of Nations to administer after World
War I. Over the years, South Africa's economic ties
with all sectors of Namibia's economy have grown so
extensively that Namibia is considered another South
African province by many whites. Namibia is a mem-
ber of the Southern African Customs Union (along
with South Africa, Lesotho, Botswana, and Swaziland)
and depends on South Africa for a wide range of
imports and capital as well as for budgetary subsidies.
Namibia's transport links are entirely controlled by
South Africa.
3. Namibian economic data are included with
South Africa's, making a clear picture of its economy
difficult to draw. It is apparent, however, that Nami-
bia has stronger economic ties with the republic than
any other nation, with the exception of the "inde-
pendent" and dependent homelands in South Africa
itself.
4. Rhodesia's longstanding economic links with
South Africa were strengthened by the imposition of
UN mandatory sanctions in 1966. South Africa has
acted as a commercial middleman in circumventing
sanctions, supplying Rhodesia with such vital imports
as oil and military hardware and providing investment
capital. Rhodesia's economy has been able to function
as well as it has over the past years largely because of
the support from South Africa.
5. For the B-L-S states, South Africa's economic
control is so extensive that these countries are often
referred to as "economic hostage states." The source of
80 to 100 percent of their imports, South Africa
operates the transport links on which those goods are
shipped and, through the Customs Union, is the
collector of 40 to 70 percent of B-L-S revenues other
than foreign aid. Moreover, South Africa employs
one-fourth to one-half of the labor force of the three
countries in its mines, farms, and industries. A com-
parison of Botswana's narrow and vulnerable alterna-
tive road transportation link to the north (through
Zambia) with the more extensive network oriented
south, indicates heavy dependence on South Africa.
Also, the republic is an important outlet for beef,
which is traditionally Botswana's single most impor-
tant export. (The area's major transport routes are
shown on the accompanying map.)
6. The B-L-S countries also depend heavily on
South Africa for investment capital for development.
In Botswana and Lesotho, South Africa is the key
source. In Swaziland sources of development capital
are more diverse, with South Africa accounting for 27
percent of total foreign investment.
7. Economic links between B-L-S and South Africa
are growing in important respects. Swaziland has just
completed a 90-kilometer rail link to the South Afri-
can system, enabling it to use Richards Bay port as an
alternative to Maputo in Mozambique. DeBeers dia-
mond-mining investments will be increasingly impor-
tant to Lesotho and Botswana. Lesotho has agreed to
study jointly with South Africa a vast project to supply
electric power to Lesotho and water to the Johannes-
burg area.
8. Receipts from the Customs Union-already the
largest government revenue source for the B-L-S
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Finaseru`
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Sudan
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countries-are expected to rise in the short term.
Bound by South Africa's tariff structure (designed to
protect South African industry from overseas competi-
tion), the B-L-S states must pay higher prices for
imports, with adverse effects on investment as well as
on consumption.
9. South Africa's economic influence on its other
neighbors is less than its leverage over Namibia,
Rhodesia, and the B-L-S. It wields significant influ-
ence, however, on Zambia, Zaire, and Mozambique
with respect to food and transport.
10. After the serious difficulties it encountered with-
importing much-needed fertilizers in late 1978, Zam-
bia reopened its border with Rhodesia to allow the
resumption of Zambian imports and exports on the rail
line through Rhodesia and South Africa. Zaire was
permitted to use the line even after the 1973 closing,
and most of the copper exports from Zaire's Shaba
Province exit via the "southern route." The southern
route is very important for exporting minerals (copper
and cobalt) from the copperbelt region of Zaire and
Zambia. Of the other major transport routes, the
Benguela rail line is closed because of security prob-
lems in Angola, the Tanzara (Tan-Zam) line through
Tanzania is hampered by operational delays, and the
route through Zaire is slow and expensive.
11. The recent food and oil crisis in southern Africa
has increased the region's trade with and dependence
on South Africa. Zambia and Zaire have been hard hit
by a drought that is causing food shortages. Both
countries need South African maize-although it is not
certain how much they will be able to afford to
buy-and the transport system to get the food in time.
12. Malawi-often criticized by other African
countries for its tacit support of South Africa-is the
only sub-Saharan state that has diplomatic relations
with Pretoria. It also has strong ties with South Africa:
37 percent of total imports come from the republic; a
large number of Malawians work in the South African
mines; and South Africa has extended about $10
million in aid to help build the new capital at
Lilongwe.
13. Mozambique has substantial economic ties with
South Africa, centering on transport and employment.
A part of the pay of Mozambican mineworkers in
South Africa is remitted directly to the Mozambique
Government in gold. This is an important source of
foreign exchange for the regime, although it benefits
less now than under the original agreement with South
Africa, which allowed Mozambique to take advantage
of the difference between international and South
African gold prices. Mozambique's rail system and its
major port, Maputo, are partly assisted by South
African technicians. Maputo ships out much of eastern
South Africa's coal, and the transit revenues are an
essential source of foreign exchange. South Africa
continues to draw about 10 percent of its electricity
from the Mozambique Cabora Bassa dam, while sell-
ing power back to Maputo.
The "Constellation" Concept
14. The basic "constellation" concept-a loose asso-
ciation of southern African states centered on South
Africa-dates back decades. Current thinking, how-
ever, is complicated by two somewhat different per-
ceptions within the government in Pretoria: a "for-
ward option" (generally backed by the military) and
what might be called the "consolidation option" (gen-
erally backed by the Department of Foreign Affairs).
While both strategies foresee the need for some sort of
southern African regional cooperation and would rely
largely on economic leverage over neighbors for effec-
tive control, there are significant differences between
them.
15. The forward option envisions a formal relation-
ship between South Africa and a buffer zone com-
posed of friendly, black-ruled states, particularly Na-
mibia and Rhodesia. A formal defense pact and an
economic structure such as a customs union, with
South Africa at their center, would provide the basis
for the arrangement. The B-L-S states and the "inde-
pendent homelands" would also be encouraged to join.
This idea has the backing of the Chief of the South
African Defense Force, General Malan, and parts of it
have been supported publicly by Prime Minister
Botha.
16. The consolidation option favors a less formal
arrangement, and would play down military links. It
would promote internationally recognized settlements
of the Rhodesian and Namibian issues and would
attempt to cooperate economically with whatever
governments come to power. Its proponents believe
this option would reduce South Africa's burdensome
defense budget, improve relations with the West, and
promote growth in South Africa's economy by reassur-
ing foreign investors of the area's stability.
Economic Implications of a Regional "Constellation"
17. Exponents of the forward option envision ever-
tightening economic bonds that would bring greater
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political and economic control over the area. Imple-
mentation of a formal arrangement such as a free
trade area with a common external tariff is probably
out of the question because of the opposition for
political reasons that would arise from South Africa's
neighbors. If it were to be implemented, however,
there would be economic benefits as well as detri-
ments for its non-South African neighbors.
18. Under this system, the member countries would
benefit from easier access to less expensive South
African products, capital, advanced technology, and
larger markets. They could expect added budgetary
revenues from an expansion of the Southern African
Customs Union. Close economic cooperation would no
doubt facilitate transport arrangements, which would
especially benefit Zaire and Zambia.
19. Economic detriments, along with the political
obstacles, would outweigh those benefits, however. For
example, a free trade area with a high tariff barrier
would encourage imports of South African products
over sometimes lower cost imports from elsewhere and
would stifle indigenous industrial and agricultural
development in non-South African member countries.
Further, those countries would lose a large degree of
independence in setting tariff rates and would be
forced to increase dependence on customs revenues
controlled by South Africa. Finally, Western aid do-
nors and investors would probably be officially dis-
couraged from providing financial resources in an area
formally dominated by South Africa.
20. For South Africa, a formal regional arrange-
ment would offer many benefits with few drawbacks.
Existing sub rosa trade, investment, tourism, transport,
and other economic links would become publicly
acknowledged and would no doubt expand. An
areawide tariff structure would increase sales of South
African goods and services to other members. More-
over, the supply of cheap foreign labor would be
assured by a formal constellation. An uninterrupted
supply of foreign labor is of major importance for
South Africa's mining sector, which traditionally has
not had to rely on higher cost domestic labor. Cur-
rently, about 45 percent of South African mineworkers
are foreign. Of these, 21 percent come from Lesotho,
10 percent from Mozambique, 5 percent from Malawi,
and most of the rest from Botswana, Rhodesia,
Swaziland, and Namibia. These workers are usually
less willing to make demands for improved work-
ing or living conditions than their South African
counterparts.
21. Proponents of the consolidation option recom-
mend few formal changes in the current situation
other than emphasizing regional development cooper-
ation and more open economic ties. They do not
envision expansion of the Customs Union. Assuming
that Namibia and Rhodesia are internationally recog-
nized and there is not a common tariff structure,
South Africa's neighbors would have more economic
choices-relative to the forward option-available to
them. For example, because they would have individ-
ual control over tariffs, they would be able to take
advantage of the lowest cost producer. Without trade
protection, South Africa would not gain a special costs
advantage. Additionally, a less formal arrange-
ment-that is, under conditions not much different
from what exist today-would offer better chances of
continued or even increased Western aid and
investment.
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Annex D
The South African Security Forces
1. South Africa is preparing its military to meet a
wide variety of threats. To improve its defensive
capabilities, the South African Defense Force (SADF)
has revamped its manpower policies to increase the
size of the standing force and draw more on the
nonwhite community. It has also reorganized the
services and is building new installations. It continues
to augment stockpiles of armaments, both by procure-
ment abroad and by local production, and to build up
its strategic reserves of petroleum, so that the mili-
tary's ability to conduct operations will be largely
unaffected by cutoffs of foreign supplies. Military
leaders advocate strengthening regional ties as another
way to keep enemy forces distant from South Africa,
and they are working to upgrade the SADF's capabili-
ties against both conventional and guerrilla forces.
2. Manpower. The South Africans will make prog-
ress toward achieving their goals for military man-
power, but not without some dislocations. For eco-
nomic and demographic reasons, South Africa has
maintained only a small standing military. Although
Pretoria has taken steps since the mid-1960s to in-
crease the size of the active-duty forces, operations in
Angola during its civil war and the subsequent deploy-
ments of troops to Namibia showed those forces to
be too small and inadequately prepared. Those conclu-
sions prompted South Africa to enlarge the Permanent
the requirement was for a year of active duty, 19 days
annually for eight years on reserve duty. (Previously, 25X1
Force (the career cadre), to increase the number of
men inducted each year as National Servicemen, and
to lengthen reserve duty in the Citizen Force and the
Commandos. Table D-1 indicates our estimates of
South African military manpower growth for the next
few years. (Tables D-2 and D-3 list selected arma-
ments and major tactical units of the SADF.)
3. The Permanent Force instructs and supports the
conscripts and the reservists when they fulfill their
annual refresher training obligation. In 1977, the
government authorized a doubling by 1981 of the
Permanent Force's share of the total Defense Force
strength-at that time 7 percent. At midpoint, how-
ever, only about one-third of the desired increases
have been achieved; so South Africa almost certainly
will not attain its expansion goal for regular service-
men. Making a military career competitively attrac-
tive has always been problematic, causing a consist-
ently high turnover rate, especially for men with
highly valued skills, such as pilots. Those shortfalls are
more evident now that the career cadre's workload is
heavier, and, if unremedied, they could eventually
hurt the quality of training.
4. To ensure that a larger force is readily available,
South Africa revised its national service laws. As of
January 1978, all white males became obligated to
spend two years of initial service and then 30 days
South African Defense Force:
Estimated Manpower Strengths, 1979-83
Permanent Force
25,000-
40,000
40,000-
(regulars)
30,000
45,000
National Servicemen
(conscripts)
Citizen Force
(firstline reserve)
Commandos
(homeguard reservists)
60,000
70,000
75,000
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South Africa Defense Force:
Estimated Inventory of Selected Armaments
ARMY
Medium tanks
250+
Armored infantry fighting vehicles
300+
Armored reconnaissance vehicles
1,200+
Field artillery
Towed, 100-mm and over
90
Towed, up to 100-mm
135
Self-propelled
50+
Air defense artillery
57-mm and over
15
Up to 57-mm
250
AIR FORCE
Light bombers
Jet fighters
Supersonic
Subsonic
Maritime patrol
Transports
Medium range
Short range
Helicopters
Fighter trainers
Jet
Propeller
Surface-to-air missile launchers
NAVY
Submarines
Frigates
Guided-missile patrol combatants
Minesweepers/ minehunters
Coastal patrol craft
21
43
158
159
125
60*
whites in the military. A 1978 general staff study of
the military's manpower needs recommended a non-
white augmentation of 10,000 to 13,000 men, a sub-
stantial increase over the 2,000 or so then in the active
duty force. The figure is now around 5,500 and
growing. The Army has the largest number of non-
whites-some 4,000-but the Navy has the highest
ratio, because over one-fifth of its personnel are
Coloreds and Indians.
6. The need for nonwhites in the defense forces will
continue. Although an SADF regulation issued in 1978
specifies that racial or sexual discrimination is imper-
missible, some apartheid practices remain in key areas.
Nonwhites are paid less than their white colleagues,
the career prospects for whites are considerably
brighter, and segregated facilities are still the norm.
The military is eliminating inequities for nonwhites to
attract recruits, but those personnel may still be
reminded that they are "second class" citizens in a
South African Defense Force: Major Tactical Units
ARMY
Permanent Force
2 armored battalions
7 infantry battalions
1 airborne battalion
2 field artillery regiments
1 air defense artillery regiment
1 mechanized infantry battalion
Citizen Force
1 corps headquarters
2 division headquarters
7 brigade headquarters
46 infantry battalions
2 airborne battalions
2 tank battalions
8 field artillery battalions
6 air defense artillery battalions
annually of reserve duty for the next four years, and
then five years of "standby" reserves.) These require-
ments represent a compromise among the competing
interests of the military, the economy, and the service-
men themselves. The military traditionally has been
staffed almost exclusively by white males, even though
whites make up only 17 percent of the total popula-
tion. Increasing the time that servicemen must spend
in uniform means a decrease in availability for work in
the civilian sector; this takes on special significance
when it involves professional or technically skilled
personnel, who are in short supply. To complicate
matters, they are usually white, and the whites' pro-
portional representation in South Africa is shrinking
because of a low birth rate and quickening emigration.
5. To keep more men in the armed forces for longer
periods, Pretoria has had to make adjustments else-
where, particularly by increasing the number of non-
Commandos
260 light infantry units
AIR FORCE
2 fighter squadrons
7 fighter-bomber squadrons
1 light bomber squadron
3 transport squadrons
5 helicopter squadrons
2 reconnaissance squadrons
NAVY
1 submarine squadron
I frigate squadron
I strike craft squadron
1 minesweeper squadron
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system they would be asked to defend. Pretoria has yet
to come to terms with citizenship issues for blacks in
the SADF. According to orthodox interpretations of
apartheid, these people are obliged eventually to
become citizens of their respective homelands. Never-
theless, the response to nonwhite recruitment has been
excellent.
7. Coloreds seem to be the primary target group for
recruitment efforts among the nonwhites. They al-
ready make up two-thirds of the nonwhite contingent
of the SADF, and the government apparently is
considering a form of the draft for them that was used
before obligatory national service was instituted for
whites. Under this system, all eligible Colored males
would be registered for service, but actual callups
would be determined by a lottery.
8. The SADF is tapping other nontraditional
sources of manpower to bolster its rolls. Women have
been able to join the Army since 1971, arid, although
they still cannot serve in the combat arms, their
numbers are increasing, freeing more men for oper-
ational service. In addition, the military has decided to
draw from the pool of immigrants. Under a 1978
citizenship law, 18- to 25-year-old male foreigners
who declare their intent to become citizens-and
thereby make themselves eligible for National Ser-
vice-cin gain citizenship after only half the normal
five-year waiting period.
9. Force Restructuring. Revised threat assess-
ments have affected the organization of the military,
and the SADF will continue to make adjustments as
conditions warrant. Restructuring has been designed to
facilitate tactical employment, enhance mobilization,
and improve command and control. Operations in
Namibia have led to a reorganization of command
structures to ensure that the forces deployed in oper-
ational areas near the border with Angola can respond
quickly and effectively to the SWAPO (South-West
Africa People's Organization) insurgency.. Once mili-
tary strategists began seriously to consider the possibil-
ity that South Africa would someday be confronted by
well-equipped and well-trained enemy conventional
forces, they began to develop an appropriate counter-
force. That has resulted in the establishment of a
tactical corps composed of two divisions-one ar-
mored and one infantry-in the Citizen Force. Plans
for further changes are not known to be on the boards;
the Army now seems to be set on improving the
performance of these reserve units.
10. The Air Force may have recently undergone
structural changes that would result in a "flattening"
of the organization, in contrast to the Army's alter-
ations. The intermediate command level between
bases and Air Force headquarters was to have been
jettisoned on 1 July, and base commanders were to
control the units stationed at their installations. More-
over, the service is reportedly planning to group
similar types of aircraft at airfields-nothing but
transports at Waterkloof, for example-and is continu-
ing to centralize the headquarters staff in Pretoria.
With these revisions and the concurrent installation of
advanced automated communications equipment, the
Air Force hopes to develop a more flexible and
responsive organization.
11. The Navy is also remodeling. Reflecting the
political decision to disclaim responsibility for patrol-
ling the cape sea route-a mission for which South
Africa never had adequate resources-three subordi-
nate command echelons with regional responsibilities
were created to improve the Navy's ability to carry
out its coastal patrol and counterterrorist missions. The
transfer of Naval Headquarters from Cape Town to
Pretoria was designed to improve coordination with
the other armed services.
12. New Construction. Sizable military construc-
tion programs are still under way. Pretoria has au-
thorized them to support larger standing forces, to
improve defenses, and to permit heavier deployment
in the areas of greatest threat. Now that the logistics
infrastructure for operations in Namibia is well estab-
lished, more funds are available for building in South
Africa proper. This is enabling the armed forces to
augment housing for personnel; construction of family
quarters will receive special attention during the next
few years.
13. Some construction is intended to enhance capa-
bilities. The Army, for example, recently opened a
Battle School at which it can stage large-scale maneu-
vers and sharpen its abilities to confront hostile con-
ventional forces. Paying heed to potential enemy
airstrikes, the Air Force has built at Hoedspruit in the
Transvaal the first in a series of "hardened" airbases
with concrete hangarettes to shield aircraft from de-
struction. To foil infiltration by guerrilla groups, the
military has cleared some areas and planted sisal plant
barriers, primarily along the northeastern frontier.
14. New construction, other than accommodations,
probably will be concentrated on the northern perim-
eter, near Mozambique, Swaziland, and Rhodesia. A
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new Army garrison is situated in the same general area
as Hoedspruit, and the majority of the planned air-
bases probably will be located in upper Transvaal,
where the military anticipates increased enemy activ-
ity. The location of the Navy's newest facility-a
forward base at Richards Bay on the Natal coast-also
mirrors the SADF's assessment that deployment close
to South Africa's borders is necessary for rapid deploy-
ment against threatening forces.
15. Prospects for South African Military Assist-
ance to Neighboring States. South Africa has for
more than a decade extended modest amounts of
military assistance to its neighbors in an effort to
maintain buffer regions against the threat it believes to
be building up against the republic. Military liaison
and intelligence exchange relationships existed with
the Portuguese before they lost their colonial African
empire. Malawi has benefited from low-key South
African advisory efforts. Several Navy advisers still
work with the Malawi Young Pioneers Naval Detach-
ment. Rhodesia has depended for its survival on South
African military and financial support, and has long
received fluctuating amounts of arms, ammunition,
training, advisory, and combat support from the South
African security forces. The SADF and South African
Police fight the insurgent war in northern Namibia.
Botswana and Lesotho are developing their small
armed forces without South African help, but Swazi-
land has acquired arms from the republic.
16. The "forward" regional security policy favored
by the SADF perpetuates the idea of military connec-
tions and cooperation. Although SADF leaders favor
establishing formal military ties with neighboring
states, they probably do not envision heavy military
commitments. They hope instead that with modest
military assistance-training, some arms and supplies,
and perhaps a minimal SADF presence-the threat to
the republic's border can be reduced or at least
delayed. The military also hopes that Rhodesia and
Namibia will be able to establish internal security
adequate to prevent any large-scale exodus of their
populations into South Africa, and to prohibit the
buildup of anti-South African guerrilla bases on South
Africa's borders. The SADF is already occupied with
the Namibian insurgency and recognizes the stress on
the South African economy and manpower resources
that deep involvement in another outside conflict
could bring.
17. South Africa's first priority is, of course, its own
military needs. The SADF is unlikely to feel that it
could spare large amounts of arms and ammunition;
heavy troop commitments, especially for an extended
period; or sophisticated weaponry such as jet fighters.
Limited quantities of materiel could be provided,
however. There are shortages of specialized personnel
within the Permanent Force, so South Africa would
have to balance the readiness and training of its own
troops against the benefits from offering advisers or
technicians to neighboring countries. The SADF could,
however, provide small numbers of officers, NCOs,
and specialists for advisory or short-term combat
missions. South Africa could also facilitate arms pur-
chases by making available its transportation network
and its considerable expertise in utilizing the interna-
tional arms market.
18. South Africa would conduct rescue and evacua-
tion operations in Rhodesia if it were called upon to do
so. An involvement of this nature might engage one or
two brigades for several weeks. Beyond this level,
military assistance to Rhodesia would depend heavily
on the kind of government that evolves in Salisbury.
19. Overtures of military assistance to the tiny
states near South Africa will be for modest and
virtually symbolic amounts of aid. Swaziland might
accept some aid, but Lesotho and Botswana, which
avoid military connections with Pretoria, would not.
As long as President Banda continues in office, Malawi
will probably maintain its assistance agreement with
South Africa, but neither state is likely to seek a wider
version of that arrangement. Pretoria will continue to
provide token levels of security assistance to these
"independent" homelands where it is welcome.
20. South Africa's Capabilities for Conducting
Military Operations Beyond Its Borders. Small-
scale retaliatory or preemptive strikes are the most
likely kinds of operations that South Africa would
conduct beyond its borders; its capabilities for larger
scale operations are much more limited. The SADF
goal is to keep opposing forces off balance before
assaults can be launched. It has the capability to
mount quick cross-border strikes into any neighboring
territory. Ground forces and specialized units such as
armor, airborne, and reconnaissance commandos are
well trained and experienced. The Air Force would
perform well in supporting deployed forces with
tactical airstrikes, delivery of paratroops or comman-
dos, strategic bombing, or intelligence gathering. Air-
to-ground coordination needs improvement but the
Air Force's pilots excel in individual skills. While
South Africa's advanced jet fighter inventory is limited
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by spare parts shortages and constraints on acquiring
replacement aircraft, numerous second-line aircraft
equipped for counterinsurgency or ground attack roles
are available.
21. While the Navy to date has had no important
role in cross-border operations and could not move
large numbers of troops for operations into neighbor-
ing countries, it is capable of mounting intelligence-
gathering operations, inserting small reconnaissance
commando units into southern Angola and Mozam-
bique for intelligence and sabotage purposes, and
providing limited offshore fire support. It could prob-
ably carry out some minelaying operations. Moreover,
in support of SADF operations beyond the republic's
borders, it could to a very limited degree harass
shipping in the Mozambique Channel, off the Cape of
Good Hope, or off the Angolan coast.
22. Even in the case of small-scale strikes, the
defense forces must take into consideration certain
constraints. The Air Force has a limited lift capability;
virtually the entire inventory of medium transport
aircraft would be required to move the Army's para-
chute brigade. Under present circumstances, range
limitations are most pertinent to planning for heli-
borne and ground force operations, although the loss of
bases in Namibia would inhibit the use of other
aircraft. Small holdings of certain types of aircraft-
notably the long-range light bombers and the transport
helicopters-will prompt defense planners to employ
those resources judiciously, particularly in areas where
the risk of loss is high. Finally, support considerations,
including a reportedly weak aerial resupply capability,
are likely to affect the duration and location of
operations.
23. Large-scale-multibrigade-operations in neigh-
boring countries would pose serious difficulties for the
South African military. Commitments elsewhere
would impose a major constraint. If South Africa were
required to maintain some 10,000 to 15,000 troops in
Namibia, with air support and current logistic de-
mands, it would be hard pressed to mount a multibri-
gade deployment into another neighboring country. A
brigade-size movement of short duration would be
more feasible, however, if lines of communication
were not too long and internal security problems were
not severe or widespread.
24. The Air Force's ability to provide logistic sup-
port to the Army, while adequate for present needs,
could be easily taxed by the demands of supporting a
large unit deployed any distance from South Africa.
The Air Force has 21 medium-range transports (seven
C-130s, nine C-160s, five C-54s) and 43 C-47 short-
range transports (plus nine VIP aircraft of other
types)-all of which are currently worked hard and
full-time as it is. Maintenance is good, but spare-part
acquisition is problematic and normal wear may
gradually degrade the fleet in the future. It would be
possible, however, for the South African Government
to compel Safair-a partially government-owned com-
pany with 16 L-100s-to take on more internal logistic
flights, relieving Air Force transports for duty support-
ing troops abroad.
25. Levels of stockpiles would also determine the
size of an effort abroad. Little is known about present
SADF stockpiles. While they are adequate for pro-
longed low-level border defense or short-duration con-
ventional defense, the SADF would probably be hard
pressed to support a long-duration conventional mili-
tary effort. The SADF, despite its self-sufficiency
claims, is girding for increased security problems in
years to come and expects supplies to be a problem. It
therefore applies conservation policies that limit its
willingness to engage in heavy combat abroad.
26. Popular attitudes toward the effort would also
have to be carefully considered. Some discontent
occasionally surfaces from the low but continuing
death rate on the Namibian border. A heavy death
toll, especially if not in direct support of South Africa's
own defense, would drain the white public's support as
well as the available manpower pool. Moreover, be-
cause the SADF is primarily a reserve force, the
military must carefully balance the number of reserves
on duty at any one time, lest long or heavy reserve
callups strain the South African economy.
27. In any military operations beyond its
ders, South Africa would weigh the risk of provoking
the involvement of an outside power, particularly
Cuba or the Soviet Union. The South Africans have
little fear of black African military capabilities, but a
military encounter with Soviet-backed Cubans or the
Soviets themselves would press the republic severely.
28. Counterguerrilla Capabilities. With good
reason, the South African Government believes that
the security forces can handle any insurgent threat
that is likely to develop against the republic for the
next several years. The SWAPO insurgency in Nami-
bia is being contained, and the SADF can maintain
control as long as it can exert continuous pressure on
the guerrillas through counterinsurgency operations in
northern Namibia and strikes against SWAPO bases in
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Angola and Zambia. Other guerrilla organizations,
although becoming more active, pose a threat consid-
erably less significant than SWAPO's, and the security
forces are unlikely to experience difficulty in counter-
ing them.
29. Police and Intelligence Capabilities. South
Africa views its police force as one of the most
efficient in the world. Although the primary mission
of the police is internal security, they are also capable
of providing a ready force for deployment against
insurgent forces, patrolling hostile borders, and con-
ducting counterguerrilla activity. The South African
Police (SAP) are capable of dealing with almost all
internal security problems. In the case of large-scale
disorders, however, they would depend on support
from the military forces. South African confidence in
its internal security forces was demonstrated recently
by publication of an amendment to the Police Act
which authorizes the use of the SAP outside the
republic's borders in the event of war or other emer-
gency. Moreover, several SAP companies, are cur-
rently serving in the border operational area of
Namibia.
30. The SAP has an authorized strength of 36,920.
Despite reports of an abundance of applicants to join
the force, its strength is below the authorization at
about 35,000. Almost half this number is nonwhite.
Additionally, there is a reserve pool of some 22,000.
31. The SAP is well trained. In addition to prepar-
ing for crime prevention, maintaining law and order,
and performing investigative work, all South African
policemen are trained in basic infantry tactics and are
qualified to use the R-1 rifle, the standard weapon of
the South African infantryman. There are also schools
that train police in counterinsurgency tactics up to the
level of a company-size unit. About 3,000 members of
SAP, including some nonwhites, are specially trained
for a military role.
32. The police are equipped with modern small
arms, more than 4,000 motor vehicles, light armored
vehicles, 80 Saracen armored personnel carriers,
Alouette helicopters (borrowed from the Defense
Force), and a number of light utility aircraft. Mobile
companies are equipped as light infantry and are
capable of operating in rural areas.
33. The police force is not, however, without its
problems. A Division of Public Relations was estab-
lished earlier this year to improve the police image,
which has been tarnished by the handling of detainees.
In an effort to overcome its reputation as an under-
educated force and to improve a lagging morale, the
SAP is now basing promotions in part on educational
qualifications and 'merit, moving away from seniority
criteria. All SAP applicants now must be high school
graduates. There is also more stress on ability to speak
English as well as Afrikaans, the language of most
whites in the police force.
34. The government's policy promotes policing of
each racial group, as far as possible, by its own people.
This policy is reflected in the SAP training program,
which has separate facilities for whites, blacks, Col-
oreds, and Indians. After graduation, new constables
are usually assigned back to the area from which they
were recruited. Although assignment of police officers
by racial group creates opportunities for participation
in sabotage or other forms of sympathy for radical
.groups, there have been no indications of loyalty
problems. Economic constraints, professionalism, and
perhaps the fear of retribution militate against disloy-
alty. There would probably have to be severe nation-
wide unrest to cause a widespread problem of
disloyalty.
35. There are three primary intelligence organiza-
tions in South Africa-the Department of National
Security, the Security Branch of the police, and Mili-
tary Intelligence. The Department of National Securi-
ty (DNS) is. charged with coordinating and evaluating
all national intelligence and transmitting it to the
Prime Minister and the State Security Council. The
DNS formulates national intelligence policy and co-
ordinates the operations of the departmental intelli-
gence organizations. Covert collection abroad is the
exclusive prerogative of the DNS, while covert inter-
nal collection is shared by the DNS with the South
African Police. The DNS is available for other duties
as assigned by either the Prime Minister or the State
Security Council. It is under this clause that the DNS is
given permission to follow the activities of various far-
right elements in the National Party, in that they could
be considered threats to state security.
36. The Security Branch of the police is responsible
for the preservation of the internal security of South
Africa. In that capacity, the Security Branch maintains
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thousands of subject and personality files. Military African Defense Force and for compiling loyalty
Intelligence, proscribed from conducting covert oper- checks on all defense personnel. Collectively, the
ations abroad, is responsible for collection of overt South African intelligence organizations appear to be
intelligence of a strictly military nature. Additionally, extremely capable of dealing with internal security
it is responsible for the internal security of the South problems.
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Military Self-Sufficiency
1. The South Africans now are able to produce most
of the equipment they require to maintain internal
security and to sustain counterguerrilla operations.
Domestic production has enabled them to expand and
improve their inventories of conventional arms. Their
achievements, however, have failed to eliminate com-
pletely the need for foreign-made weapon systems,
spare parts, ammunition, and technology. Because
military strategists have begun to factor well-equipped
enemy conventional forces into their defense planning,
maintaining a diverse collection of sophisticated weap-
ons for all contingencies has assumed greater impor-
tance, and domestic production of all required arma-
ment is an objective that South Africa cannot fulfill.
2. Military self-sufficiency has been a high-priority
objective since 1963, when the UN Security Council
passed a resolution requesting all countries to termi-
nate the sales of arms, ammunition, and military
vehicles to Pretoria. Although a number of nations
chose to ignore this voluntary embargo, it nonetheless
put the South Africans on notice that relying on
foreign sources for weaponry could jeopardize their
defenses. At that time, South Africa produced few of
its own armaments.
3. The willingness of other countries to fill the gap
created by London's eventual decision to honor the
embargo-the United Kingdom had been South Afri-
ca's primary and traditional supplier-was instrumen-
tal in helping Pretoria to expand and improve its arms
production capabilities during the 1960s and 1970s.
France and Italy served as its major helpers, although
South Africa drew on the resources of several other
countries as well. Pretoria used those opportunities to
rapidly bolster its forces by purchasing a wide range of
modern armaments. Whenever possible, it tried to
include assembly or production rights in the purchase
package to give the local arms industry additional
experience while adding much-needed items to the
inventory.
4. The foundation built during those years helped
South Africa weather the embargo that went into
effect in 1977. Compliance with the embargo was no
longer a matter of choice for the UN membership; this
time the resolution was mandatory and the Security
Council broadened its provisions to close the loopholes
of the earlier version. Besides prohibiting the transfer
of hardware, ammunition, and supplies to the South
African security forces, it sought to forestall additional
assistance to the local arms industry. Member states
are exhorted to withdraw support for the manufacture
of arms and equipment, to refuse to enter into new
licensing agreements for production of weaponry, and
to terminate all outstanding contracts.
5. Domestic Production. South Africa's ability to
produce the arms and equipment used by its military
and police forces is the direct result of liaison with
foreign manufacturers, who provided support, includ-
ing licenses and components, for manufacturing pro-
grams. The South Africans have been able to parlay
this assistance into a number of successful ventures,
including some in which the "lessons learned" were
incorporated into local design projects.
6. Improved technology has increasingly become a
byword of South African foreign military procure-
ment, as Pretoria has come to perceive that licensed
assembly and production are only the first steps in
achieving self-sufficiency. It has also learned that such
programs do not necessarily eliminate the vulnerabili-
ties to an embargo that are usually associated with
buying foreign equipment. The government now
speaks more often of technological self-sufficiency,
whereby it will become truly independent-able to
fabricate suitable alternatives to what it is denied as
well as produce new generations of weaponry for its
arsenal. This is a difficult goal to achieve, however.
7. South Africa now makes the bulk of its ammuni-
tion and small arms. It produces-in various calibers-
handguns, rifles, submachineguns, and machineguns.
Continuing purchases of foreign-made small arms,
however, may reflect output limitations as well as the
desire to accumulate large stockpiles. Ammunition
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shortages during the Angolan incursion prompted
high-level reevaluations of assumptions about wartime
consumption estimates, satisfactory reserve levels, and
prospects for resupply. Since then, the military has
established a production line that permits increased
output as well as the manufacture of larger caliber
shells, and it plans to phase out some systems, such as
the 25-pounder and 3.5-inch guns, for which ammuni-
tion is not made locally. But so long as the military
retains a multiplicity of foreign-made armaments-as
it will for the next several years-South Africa will be
obliged to fill some of its ammunition requirements
abroad.
8. Except for tanks, the Army's needs for armored
fighting vehicles are satisfied through local production.
A few US-made Sherman tanks remain on hand, but
South Africa's main battle tank is the British Cen-
turion. Following the Angolan civil war, when South
African troops encountered Soviet armaments on the
battlefield for the first time, Pretoria, with assistance
from Israel, began to refurbish its Centurions. The
revamped tanks reportedly mount a 105-mm gun
instead of a 20-pounder, are powered by a diesel
rather than a gasoline engine, and have improved fire
control systems. Military planners have considered
manufacturing a few hundred copies, a project that
would require a foreign supply link for such critical
components as engines, transmissions, and fire control
devices. Any tank program that South Africa em-
barked on, whether it involved production or rebuild-
ing, would falter without outside support.
9. Armor that South Africa does make includes the
Ratel armored infantry fighting vehicle, the Eland
armored reconnaissance vehicle (the French Panhard
AML-245), and a series of trucks and utility vehicles.
South Africa's achievements in this area would have
been slowed considerably if France had not granted a
production license for the Eland. Up to 1,000 of those
vehicles, fitted with either a 90-mm gun or a 60-mm
mortar, have been made since the mid-1960s, and
production shows no sign of ending. That assembly
experience proved useful when the military started to
think about a follow-on replacement for the British
Saracen, the Army's main armored personnel carrier.
A few Eland features were incorporated into the
native-designed Rate], which went into series produc-
tion in 1976. The vehicle uses a German diesel engine,
and stocks of engines apparently have been sufficient
to sustain production. A few hundred Ratels are now
in the Army's inventory, enabling the service to
mechanize some units and consider retiring some of
the Saracens. Production of the armored trucks and
utility vehicles is strictly a local venture, which mates
a variety of vehicle bodies with armor plating to turn
out hardy counterinsurgency equipment.
10. Until the South Africans are able to make
enough of what they call a domestically designed 155-
mm field artillery piece to supplant their older British
models, they must depend on foreign sources for spare
parts and ammunition to keep the weapons operation-
al. Series production is said to have started in early
1979, but output probably will be too low to phase out
the British guns quickly. The only other "South Afri-
can" field gun that has been produced was an impro-
vised union of a 90-mm antitank gun barrel (courtesy
of the Eland program) and a 6-pounder gun carriage.
11. Although a number of the Air Force's trainers,
utility aircraft, and fighters were put together in South
Africa, military planners cannot count on local pro-
duction to meet all requirements. Atlas Aircraft Cor-
poration, the country's lone aircraft manufacturer, has
no significant experience in aeronautical design
work-a shortcoming that inhibits its ability to devise
suitable models for the military. Production of suffi-
cient spare parts and engines, even for some of the
aircraft assembled in country, is not assured because of
the limitations of licensed manufacturing, and that in
turn could have an adverse impact on operational
readiness.
12. The Impala (Aermacchi MB-326) program is
Atlas's most well rounded experience. Starting in the
mid-1960s with a license and major subassemblies,
Atlas has progressed to actual manufacture of the
trainer and ground attack versions of the Italian
aircraft, including the British-designed engine. Only a
few minor components are still bought abroad. Most of
Atlas's other endeavors are essentially assembly oper-
ations. Forty-eight Mirage F-is, for example, were
made in France, then disassembled for shipment to the
South African factory. Italian assistance enabled Atlas
to assemble two types of light aircraft as well.
13. South Africa is not in a position to depend on
local industry to satisfy the military's needs for mod-
ern tactical missile systems, including antitank, air-to-
surface, and surface-to-air. It once had a coproduction
arrangement with France for the Crotale air defense
missile system, but differences that developed between
the two countries allowed South Africa to acquire only
nine batteries. More recently, after a decade of effort,
South Africa declared that its Whiplash air-to-air
missile was operational. Apparently modeled closely
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after the US Sidewinder, the missile is unlikely to
replace the Air Force's French Matras until its reliabil-
ity and performance are clearly established. Output of
the Whiplash and an antiship missile reportedly under
development-which may be a modified Israeli-made
Gabriel-may in any case be slowed by problems with
propellant production.
14. Most of the South African Navy's ships are
British. Nonetheless, the South Africans intend to
assemble under license up to nine Israeli-designed
Reshef missile boats, a local design program is sched-
uled to turn out 30 harbor launches, and Pretoria is
considering constructing as many as six corvettes, with
considerable outside help. The corvettes probably will
not come off the building ways until well into the next
decade, but the other two programs are providing the
Navy with some of the boats it requires for its newly
emphasized coastal patrol missions.
15. The Arms Embargo and Foreign Military
Procurement. The 1977 arms embargo has failed to
stop all shipments of weapons and equipment to South
Africa, and, short of a full-blown blockade, military
materiel will continue to get through. Private arms
dealers have become the primary source of foreign-
made armaments during the past two years, but they
cannot offer the variety and volume of modern weap-
ons or the technology to advance local production that
might come from government-to-government or gov-
ernment-proprietary relationships. Additionally, the
brokers' prices and terms are much less favorable and
the quality controls less stringent than in legal arms
deals.
16. The experience since 1977 suggests what South
Africa will get from arms merchants in the next few
years. Most of what is available to South Africa on the
international market are weapons and equipment
already in the inventory. Into this category fall items
such as Centurion tanks, mortars, small arms, transport
aircraft, and ammunition and spare parts. A few
weapons that might be purchased would be new
entries into the armed forces' holdings.
17. It is not clear how successful Pretoria has been
in matching the military's requirements to what has
been available through the arms dealers and from the
occasional government willing to continue selling to
South Africa. Israeli Reshef missile boats (both in
completed and kit form) are the most visible deliveries
from abroad in the past two years. Another major deal
added British-made Centurions to the Army's inven-
tory, but even in the case of these tanks the exact
number acquired is unknown. Less prominent weap-
ons are, of course, more difficult to monitor.
18. Stealth will remain a prime characteristic of
South Africa's foreign military procurement so long as
there is an embargo, and new ploys would be devel-
oped to avoid detection in the event of sanctions. One
of the schemes for evasion uses false labeling. This is
how South Africa reportedly acquired some Mirage
fighter spare parts from Israel earlier this year; they
were called "steel products," on which there are no
restrictions. Pretoria has also used intermediaries to
conceal the final destination for denied items. India,
for example, may have unwittingly sold some Centuri-
on tank hulls to South Africa through a Spanish
representative who portrayed local forces as the end
users. Complicated transshipment arrangements have
moved prohibited items into South Africa as well.
Chartered ships and aircraft have declared another
destination, then unloaded in South Africa; materiel is
also shipped to a location that functions as a forward-
ing area.
19. Staying Power of the Military. The South
African military will not grind to a halt even if
sanctions are imposed during the three-to-four-year
period covered by this memorandum. Because the
government has been preparing for 16 years, the
armed forces could manage, albeit with diminished
capabilities, even if strictly enforced international
economic actions should be taken. Selective foreign
procurement, improved management and conserva-
tion of resources, and the emphasis on domestic
production all have strengthened South Africa's ability
to withstand such measures. Preparations also have
included the stockpiling of fuel. Pretoria reportedly
has strategic reserves amounting to a two-year supply
at current consumption rates, and it is enlarging
storage depots while working to increase the share of
its petroleum needs met locally.
20. The Army would be the most durable of the
services in the event of sanctions. If the measures were
put into effect in the near future, the Centurion
projects might suffer and the Army probably would
use certain armaments more sparingly, particularly
aging foreign specimens, but ground force capabilities
would be largely unimpaired. The resources that the
Army currently has and can acquire locally are ade-
quate to sustain any foreseeable operations for some
time, even if sanctions are imposed. What bothers
some military leaders is the possibility of a combina-
tion of more effective supply cutoffs, the acquisition
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of new generations of armaments by South Africa's
enemies, and intensified military pressure, a scenario
that is improbable at this time but would indeed strain
the Army's capabilities.
21. The Air Force would suffer from the imposition
of sanctions. Even now there are indications of short-
ages of spare parts-engines mostly-for older for-
eign-model aircraft such as the Canberras and Bucca-
neers. As time goes on and the Air Force's spares are
used, the availability rate for those aircraft will fall
because stock replacements will probably not match
consumption rates. Transports, interceptors, maritime
reconnaissance aircraft, bombers, and helicopters are
especially vulnerable. South Africa has no hope of
producing any of these aircraft in the foreseeable
future.
22. At least for the next few years, the Navy would
be fairly resistant to sanctions, and its abilities to
perform its coastal patrol duties, now the most impor-
tant of its missions, would be largely unaffected.
However, the corvette project, highly dependent on
foreign assistance, would probably fall victim to eco-
nomic measures, and the Navy would be concerned
about its ability to replace those portions of the fleet
that are of 1950s vintage.
23. Government leaders on the whole probably feel
fairly confident about the near-term outlook for the
military under a continued embargo and even under
more severe restrictions. Some requirements for for-
eign purchases most likely would be fulfilled, although
sanctions could make the process more difficult and
the gains smaller. Major pieces of equipment, such as
aircraft, would be considerably harder to obtain and
conceal, although Pretoria might be successful in
acquiring such items as spare parts and ammunition.
Judged by what it has, can make, or is likely to be able
to buy abroad, South Africa has the wherewithal to
conduct a prolonged and successful defense against
armed liberation groups or the conventional forces of
neighboring black states. A dramatic change in the
holdings or capabilities of its foes could alter that
balance, but, as noted above, such a development is
unlikely to occur in the next few years. South Africans
have considerable reason to believe that their military
dominance in the region will remain intact.
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