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Peacekeeping Africa 2009 Address

July 25, 2009

Mr. Chairman
Distinguished Guests
Ladies and Gentlemen

There was a time when our continent was regarded as a problem child
of the international community. Newly independent countries of Africa
were struggling to stabilise and develop their fledgling nations – many of
whose dimensions and borders had been determined by the European
powers in a previous century. Europe’s withdrawal from Africa
coincided with the growing tensions of the Cold War, the logic of which
led to a variety of proxy wars on our continent, and the people of Africa
were once more the victims of forces over which they had no control.

They understood it very well, and at their inaugural meeting in 1963, decided
there was no choice but to accept the borders bequeathed to us by the
departing colonial powers. They knew the frontiers were artificial; they
made little sense in the African context, and could become the source of
future conflict; but the alternative was much worse. Thepriority, in
1963, was to consolidate national independence, and to focus on socioeconomic
development: whereas a dispute over borders would simply
distract, and quite possibly destroy the dream of freedom.

Virtually all of these fledgling African nations lacked the political,
economic, and civil institutions required of a modern state, at least
insofar as these concepts are understood in Western democratic
thinking. They acquired a reputation for instability, military coups, Big
Man leadership, humanitarian disasters, economic regression, and in
some cases the breakdown of what had once been functioning states.
The dream of freedom, in its fullest sense, was as elusive as ever for a
great many of Africa’s people.

All that began to change quite profoundly with the end of the Cold War.
The withdrawal of foreign troops from African soil; the independence of
Namibia, and the democratic transition in South Africa brought a new
dawn of hope to our continent. Increasingly African countries began
taking their destiny into their own hands; committing themselves to
good governance, respect for human rights, expanding the number of
multiparty democracies with regular elections, and the peaceful transfers
of political power; attracting foreign investment and growing their
economies. So profound was the change that the OAU became the
African Union in 2001, encapsulating all of this in the name of the African
Renaissance. Leaders of African states who came to power through
undemocratic means were firmly informed that they were no longer
welcome at the table of our continent’s collective leadership.

I mention this because what I am going to say must be seen in its
historical context. We continue to face challenges in Africa, but at no
time have prospects for African growth and renewal been better than in
recent years. There will be setbacks: the UN Secretary General has
noted what he calls “the troubling re-emergence of unconstitutional
changes of Government”. Coupled with the economic crisis now
gripping much of the world, some commentators have been quick to
predict that the gains of the recent past will soon be lost. But they
underestimate Africa, and the will of its people to succeed and prosper.
The call for “African solutions to African problems” was never stronger
than it is now. The United Nations will assist, as will others, but it is the
people of the continent that will build durable peace, security and
sustainable development. The UN Security Council is working closely
with the AU Peace and Security-Council, developing a UN Ten-Year
Capacity-Building Programme in support of AU peacekeeping. This is of
crucial importance as it will empower the people of Africa to both build
and keep the peace and security so essential for the socio-economic
development of the continent.

Over the years African countries, their diplomats, soldiers, and officials
have participated in numerous peacekeeping missions in various parts of
the world, and have earned a distinguished reputation for the effective
work they have done. Africa has certainly made a proud contribution,
but there are limitations which continue to inhibit the full participation
of African countries in these missions. Overcoming these limitations, to
the extent that a private-sector defence company can play a role, is the
subject of my remarks today.

African peacekeepers have seldom, if ever, been deployed on a fully selfsustained
basis, i.e. with troops, equipment, support systems, and their
own command. The scale of the investment required is often beyond
their reach, but the UN peacekeeping system is structured in such a way
that the highest levels of reimbursement are for contingents that are
fully equipped and self-sustainable. This effectively locks out the lowincome
countries from playing a bigger role, and from growing their
technical defence capabilities. Indeed, developing such capacities creates
gainful employment across a wide variety of disciplines, improves training
and transferable skills in the use and maintenance of advanced
equipment, and has a host of spin-off benefits for countries that would
otherwise not be in a position to aspire to them. Developing countries,
as a general proposition, have such huge demands on their modest
budgets, that allocating resources to defence and related requirements is
extremely difficult, while at the same time the need to keep alive their
competence in these areas is undisputed.

Countries not engaged in armed conflict, or not facing an identifiable
threat cannot easily justify the procurement of modern equipment in the
face of overwhelming socio-economic needs. So, clearly, African
countries face particular challenges, and the system of reimbursement
employed by the UN does little to assist them. In principle, participating
in peacekeeping missions holds out the promise that troops can be
remunerated, training upgraded, skills acquired etc., but the realities of
tight UN time-lines, high expectations around readiness to deploy, and
the financing requirements to achieve an appropriate level of readiness,
are beyond the realistic capacities of many countries.
I am very well acquainted with these dilemmas. My colleagues and I, in our
organisation, have made careers of it for the past 15 years. Finding
innovative solutions to these dilemmas has allowed us to make a useful
contribution to the continent, and to help developing economies around
the world to fulfill their ambitions to become global partners in the
search for peace and security. It has also provided us with an
opportunity to work with some inspiring men and women: committed
Africans and many unsung heroes who have shown us how they can
overcome almost impossible odds and turn old challenges into new
opportunities. Working together, we have been able to devise creative
ways to support countries in ways none of us had previously thought
possible.

The best way to illustrate this is to talk you through some case studies,
because I suppose one of the secrets of successful innovation is simply
to go out and do it, to prove it is possible, and go and talk about the
theory afterwards. Conferences like this are extremely useful, but as
you know, normally we talk theory, discuss why it cannot be
implemented because of insurmountable problems, and then go home
feeling sorry for ourselves. That is exactly what we should NOT be
doing.

Let me talk about one African country. A proud nation with a long
history in peacekeeping, but whose declining economic fortunes had
reduced the defence budget so dramatically that it could do little more
than cover the salary bill. For about 15 years they had been unable to
update or modernize their equipment, and without its peacekeeping
missions it would not receive foreign revenue inflows to keep its
defence competence alive.

I met the Chief of Staff in this country many years ago and, very
emotionally, he pored out the reality of his situation to me. He told me
about the politicians with unrealistic expectations. He took me to see
their vehicle maintenance facilities, under a tree, and I will never forget
watching two engineers pulling apart the engine of a large 1960’s vintage
armoured personnel carrier, and trying to repair it using any parts they
could find. I marveled at their ingenuity and amazing drive to succeed,
but could not avoid the obvious signs that this country had no prospect
of continuing its proud military tradition unless something drastic were
done to rehabilitate its peacekeeping capability. There was very little
money available for capital equipment, and only then by cutting costs on
training, food rations, and the like. That small amount would be used in
an attempt to keep their ancient equipment going, through
extraordinary improvisation, creating the illusion that their competence
remained intact. By the time I met the Chief of Staff the pyramid
scheme had collapsed. Nothing in the vehicle park was operational, and
there was absolutely no way that any serious peacekeeping deployments
could be considered, beyond a modest supply of troops and a few softskin
support vehicles. That does not bring in much by way of
reimbursement.

The Chief of Staff explained, with much frustration, how his small capital
budget was applied, year after year, to buy pieces of the peacekeeping
solution, none of which were mutually compatible, because of political
pressure. One year a piece would be bought from France, the next year
something from Spain, the following year the Malaysians would be in
favour, after which they might acquire something from Russia, and then
South Africa: the nett result was their money had been squandered on
an unsustainable, unsupportable system. South Africa had also been
disappointing. He had hoped for more from what he understood to be
our world-class defence capability, but also here he had been presented
with a catalogue of 500 suppliers of components. He had gone away
despondent because there was no system integrator: nobody was
interested in understanding his operational requirements. They just
wanted his cash up-front, because even here, African countries were
considered basket-cases, unable to pay or meet their obligations.

Ladies and Gentlemen, that was 15 years ago. Today we can say we
have been successful in supporting that country. We sent in experts to
fully understand their operational needs. We did a comprehensive
analysis of exactly what equipment they had in their inventory, what was
salvageable and what had to be scrapped. We did a detailed assessment
of their training, and we started from scratch. Today that country has a
fully operational capability and is a major contributor to peacekeeping
missions.

How did we do it? We started with the biggest problem: i.e. how are
we going to fund this? We created innovative funding schemes that
comply with international norms and standards and do not rely on
foreign banks. We commenced negotiations with the Ministry of
Finance, and focused on what they could realistically accommodate. We
discovered that for the Finance Ministry a normal credit agreement with
a foreign bank would comprise more than a thousand pages of
documentation. We devised funding agreements of less than thirty
pages. The bureaucracy required to deal with a thousand-page
document renders it virtually undoable: the number of signatures on a
thousand pages is hard to imagine, so we came up with one that requires
only three signatures: from the Minister of Defence, the Minister of
Finance, and the Attorney General to confirm its legality. This little
innovation, just in itself, took projects that had previously been outside
the realm of possibility, and made them implementable.
The next problem to deal with was the piecemeal building of a system.
We realized that this was never sustainable, and to solve it we designed
systems that were turn-key, could be delivered all at once, were fully
operational, integrated, and answered to the requirements of the client.
In short, it was a complete solution, and it worked. The technology was
appropriate for the requirement; they were fully equipped for the
mission, and could once again take their pride of place among the
peacekeeping nations of the world.

This may all sound rather simple, but for a nation struggling to maintain
its capability, it is extremely difficult: and for a private defence company
such as mine, it requires a great deal of effort and experience to develop
the required expertise.

I always tell the wonderful story about arriving one day at the office of a
Head of State, just as three very well-dressed European gentlemen were
leaving his office. While the President took a call, I saw reams of
proposals piled on his counter. Now, this particular country had a
major smuggling problem across a large body of water, and the President
wanted to introduce the required naval capability to sort it out. On his
table was a proposal to, quite literally, build a frigate on the shores of
the lake, for a crew of 30 people, with the latest radar tracking system.
The frigate was to be equipped with missiles and all sorts of fancy
weaponry, and the plan was to use all of this to solve the smuggling
problem. I looked at this and couldn’t help laughing to myself. The
President put down the phone and asked: “What is so funny?”
I said “Mr. President, this is ridiculous. Your problem is a very simple
one. Your operational requirement is not for hundreds of millions of
dollars of naval capability”

He replied “Well, if you are so clever, come and give me a solution”.
I came back to South Africa, sat down with our teams, and in five days
we had devised a solution that provided for a number of rigid inflatables,
an integrated communication system, a commercial off-the-shelf radar,
some 20mm low-recoil canons, some loud hailers and a very
comprehensive training programme. Now, some 12 years later, this
system still operates successfully and the smuggling problem is no longer
a threat. The system cost less than 3 million dollars, of which about
one third was for training and support. Today more than 300 people
are employed on border patrol, they have equipment that works, and
there is no smuggling problem.

That’s the difference: the hundred million dollar system would never
have been implemented. It COULD never have been implemented, and
there would have been no way of putting a halt to the smuggling. In
contrast, we helped them to solve it simply, effectively and inexpensively.
We apply exactly the same principles to peacekeeping. As you can
imagine, this irritates some of the major international defence
companies, because they want to sell brand new, bigger, state-of –theart
equipment that is costly, and often inappropriate for the
requirement.

We, on the other hand, want African governments to have practical long
term solutions that are both successful and affordable. So, we do not
simply take the cheque and walk away. We finance the systems over a
period of 5 to 7 years, and this brings an interesting value addition. To
keep it operating over that period and beyond, we built long-term
maintenance capabilities into our funding packages. As you might know,
United Nations reimbursements only continue for as long as the
equipment is operating. This is a trap for many developing countries:
they deploy troops and equipment, but do not have the ability to
support and maintain their equipment in the peacekeeping theatre: it
very quickly becomes inoperable, the reimbursements stop, and often it
is not cost-effective to even move this equipment back to base. So
when funding a package over time, as we do, you run the risk of not
being paid if your equipment does not work. By creating long-term
maintenance provisions, however, we are able to ensure dispatch
reliability, and ensure the viability of the funding package. Governments,
through their Ministries of Finance, are therefore confident that they can
rely on the reimbursements to cover their payment obligations.

This might sound like a neat way of closing the circle, and often it is; but
we have to be aware that there are serious pitfalls in the peacekeeping
system. There is much talk in UN circles about finding new, more
reliable ways of financing peacekeeping missions; but the reality is that
there is no mechanism by which governments can match their expenses
(i.e. outflows for the payment of equipment and services) with the
reimbursements they receive from the UN. This can create a crisis of
major proportions.

How do we solve it? We break down the repayments into small,
affordable sums that can be secured out of operating cash-flow. A typical quarterly repayment, against say a 50 million dollar project financed over 5 years, would be 2.5 million dollars a quarter. There are
very few countries on the continent that cannot find two-and-a-half
million dollars a quarter to pay for a major defence acquisition. So this is
a collaborative process. When Ministries of Finance ask for our term
sheet, we sometimes puzzle them by saying “explain your cash flows,
and then we will create a term sheet for you.” Never before have they
heard that little innovation. What it does is open the door to credit for
countries that have not otherwise been able to obtain it. Countries that
have never been able to satisfy the credit requirements of commercial
banks, and have relied either on donor funding or concessionary credit,
suddenly find themselves in the unfamiliar situation of being able to
afford the solution they want.

I think you will agree that the thoughts I have shared with you today
represent an innovative approach to funding peacekeeping missions. It
has enabled developing countries to overcome obstacles that were once
thought virtually insurmountable. I and my organisation have learnt a lot
over the past 15 years, testing the boundaries of what is possible, and
what is not. We take pride in the work we have done, and the work we
are doing now, and we take a lot of satisfaction in knowing that we are
making a positive contribution to the peace and development of Africa.