Offset & Poverty


On 24 November 1999, the South African Council of Churches, the Christian Council of Sweden, the Coalition for Defence Alternative, and the Swedish Fellowship of Reconciliation convened a seminar on Defence Expenditure and Poverty Alleviation as part of the "Civil Society Encounter" held in conjunction with the state visit of the Swedish Prime Minister, Goran Persson. The meeting was addressed by the Rt. Rev. David Beetge, Anglican Bishop of the Highveld, Rev. Bo Forsberg, Director of Diakonia (Sweden), the Hon. Nozizwe Madlala-Routledge, the South African Deputy Minister of Defence, and Mr. Roger Hällhag, International Policy Advisor to the Prime Minister of Sweden.

The convenors thank the seminar presenters and participants for their commitment to open debate on defence and development issues. The South African participants also thank the Swedish government and people for their assistance in the struggle against apartheid and for their continuing support for transformation and development in South Africa.

In light of the information presented at the seminar, the four convening organisations ACKNOWLEDGE that:

  • In a situation where the majority of the population live below the poverty datum line, poverty constitutes the most significant threat to South Africa's security and democratic government;
  • South Africa's Constitution, in terms of the Bill of Rights and section 198(a), gives priority to human security over traditional notions of military security;
  • There is no discernible military threat to South Africa to warrant expenditure of R30 billion on new arms, including BAe/Saab JAS-39 Gripen fighter aircraft;
  • As a percentage of GDP, defence spending has declined substantially from pre-1995 levels to less than 1,5% today;
  • Although expenditure on the current arms procurement package will be spread over eight or more years, it will necessitate a 14,9% average annual increase in the defence budget over the next three years—more than double the average annual increase planned for any other sector;
  • The European Union's Code of Conduct on Arms Exports (Criterion Eight) requires consideration of socio-economic conditions in the recipient country;
  • The proposed arms procurement package includes industrial participation, trade and investment agreements (offsets) valued at R110 billion;
  • The South African government claims that the offset arrangements will generate 65,000 new jobs;
  • International research exposes the malpractice of offsets relating to military expenditure as a scheme to provide political legitimisation for the large outlays by allowing policy-makers to point to ultimately non-existent economic benefits;
  • Northern industrialised countries prohibit the use of offsets in agreements among themselves on the grounds that they distort markets and encourage corruption;
  • Notwithstanding South Africa's desperate need for jobs, the moral implications and the sustainabilty of job creation initiatives must be taken into account;
  • The armaments industry is capital-intensive rather than labour intensive and is therefore an poor creator of jobs, particularly at less skilled levels;
  • The armaments industry is invariably heavily subsidised, diverting public resources away from socio-economic upliftment;
  • The armaments industry's record of corruption gives cause for alarm;
  • South Africa's rearmament may trigger an arms race in the subcontinent and elsewhere;
  • Churches and many civil society organisations in Sweden and South Africa have consistently called for the abandonment of the arms sale and the redirection of these funds into sustainable social investment to enhance human security.
  • Further, WE RECOGNISE that, in spite of the persistent calls for a reconsideration of the arms deal, the South African government and industry representatives from Sweden, Britain, Germany and Italy met in Pretoria on 3 December 1999 to finalise the deal.


  1. The South African government to demonstrate its commitment to fighting poverty and corruption by:
    1. Publishing complete details of the offset agreements associated with the arms procurement package;
    2. Establishing a broadly representative committee (including civil society representatives) to assess the likely impact of the offset agreements, to analyse their potential for reducing poverty and unemployment, and to consider alternative options for deploying these funds to promote genuine human security through socio-economic development;
    3. Initiating an independent judicial inquiry into the allegations of corruption which have been made in connection with the arms procurement deal;
    4. Declaring a moratorium on implementation of the deal until both the commission of inquiry and the review committee have completed and published their reports and the public have had an opportunity to study and debate their conclusions;
    5. Reconsidering its arms procurement plans in light of these reports.
  2. The South African government to promote compliance with the arms export criteria of the National Conventional Arms Control Committee by entrenching these conditions in law.
  3. The South African government to work closely with church, community, and other civil society organisations to develop and implement creative plans for the conversion of military bases and defence industries to productive civilian use.
  4. The Swedish government and Saab to cooperate fully in these inquiries, to suspend the sale of arms to South Africa until the review process is complete, and to urge the British, German, and Italian governments and suppliers to take similar action.
  5. Churches and NGOs in Sweden and South Africa to continue to challenge their respective governments to accelerate demilitarisation, to abandon arms production, to devote public resources to the reduction of poverty, and to resolve conflicts without violence.

South African Council of Churches
Christian Council of Sweden
Coalition for Defence Alternatives (South Africa)
Fellowship of Reconciliation (Sweden)

9 December 1999

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