ECONOMISTS ALLIED FOR ARMS REDUCTION-SOUTH AFRICA

Letters To The Editor ECONOMISTS ALLIED FOR ARMS REDUCTION-SOUTH AFRICA
Business Day ECAAR-SA
Johannesburg 3B Alpine Mews, Box 60542, High Cape, Cape Town 8001

February 16, 2002

Dear Sir

THANKS for taking note, Greta Steyn, that since December South Africa has borrowed more than R25 billion in foreign loans (Command performance required of Manuel, February 15). This financial spin-doctoring is undoubtedly the major factor in the recovery of the rand from R13.88 on December 20, but confirms that the Treasury and SA Reserve Bank have learnt nothing from the forward book and Asian contagion debacle of 1998.

In addition to his Budget speech on Wednesday, the Minister's deadline expires on Thursday to file affidavits detailing the basis on which he intends to oppose ECAAR-SA's application to the Cape High Court for cancellation of the arms deal. We contend that the arms deal is strategically, economically and financially irrational, and thus constitutionally unlawful. In addition, the Minister failed to comply with the provisions of the Exchequer Audit Act or Public Finance Management Act that govern the management of his portfolio.

The arms deal was costed at R6.25 per US$1. The Cabinet was warned by numerous sources, including the Department of Finance, that the foreign exchange and other risks were very considerable, and would inevitably limit South Africa's ability to meet the social upliftment commitments of the Bill of Rights. Despite these warnings, the Minister recklessly and unlawfully committed South Africa to foreign loans to fund the arms deal.

Our application includes projections made in March last year of rand/dollar exchange rates of R31.70 per US$1 by 2010, R37.07 by 2011 and R43.45 by 2012. These projections have already proved understated, with some analysts predicting R15 or R16 by the end of this year should the situation in Zimbabwe continue to deteriorate.

Bennie Bunsee (Time running out to make the right changes, February 15) pleads for "the government and all South Africans to realise that we are sitting on a time-bomb." Illustrating this, the housing shortage in the Western Cape is estimated by the Department of Housing at 310 000 units, and is expected to increase to 410 000 units by the year 2006.

Yet all 410 000 units could be constructed for less than the cost of the three submarines, now estimated at over R10 billion thanks to the collapse of the rand. In the process, an estimated 290 000 jobs would be created in the building and building supply industries.

Captain (now Admiral) Cubby Howell gushed before the Joint Standing Committee on Defence that "submarines are the ultimate stealth weapon to protect fish." The JSCD was told on another occasion that "submarines make small navies important, and that South Africa needs the capacity to give the Americans a bloody nose."

Our government was gullible and naive in swallowing the pretensions of the "toys for boys" lobby. At issue now is whether the Cabinet and Minister of Finance will have the courage to concede that the human security needs of people take priority over fish, and to cancel the arms deal at no cost to South African taxpayers.

Yours faithfully

Terry Crawford-Browne

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