Major arms deals by Latin American countries


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May 6, 2009
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Wed Sep 16, 2009 2:41pm EDT

(Reuters) - Venezuela's new weapons deals have spread fears of a South American arms race and put President Hugo Chavez where he is happiest -- challenging U.S. power and playing to his home crowd.

South American nations are spending billions bulking up the military to defend rugged jungle and mountain borders as well as oil and mineral reserves. However, analysts say the region faces few real external threats.

Following are some details about arms purchases by major Latin American countries in recent years:

VENEZUELA: Venezuela's defense budget was $2 billion in 2008, with spending as a share of GDP normally between 1.2 and 1.6 percent since President Hugo Chavez took office.

Chavez said on September 13 he was buying an advanced S-300 missile defense system and 92 tanks with a $2.2 billion credit from Moscow. In recent years, Venezuela has bought over $4 billion in weapons from Russia, including 24 Sukhoi fighter jets, helicopters and 100,000 Kalashnikov rifles.

BRAZIL: Spent a record $15.5 billion on defense in 2008, similar to Venezuela as a percentage of GDP.

Brazil's minister for strategic affairs said in September 2008 the country must increase military outlay to defend huge offshore oil discoveries and Amazon resources.

Brazil and France signed in December 2008 a defense deal worth up to 8.6 billion euros ($12 billion) which will give Brazil technology to develop its arms industry and Latin America's first nuclear submarine. Brazil earmarked $880 million in 2007 to complete a reactor for the sub.

Under the deal Brazil will buy 50 Super Cougar helicopters worth an estimated 1.9 billion euros ($2.7 billion) and built by Helibras, Eurocopter's subsidiary in Brazil, for 2010.

CHILE: With a long military tradition and lengthy coastline, Chile spends big on arms. Its defense bill was $4.8 billion in 2008. As a share of GDP it spends over 3.5 percent on average.

In March 2006, Chile concluded a deal to buy 118 Leopard 2 tanks from Germany to replace 131 tanks it plans to retire. Chile's recent buys include used F-16 aircraft, frigates from European countries, and U.S. harpoon missiles.

In December 2005, Chile agreed to buy 18 used F-16 aircraft from Holland for $185 million. In 2002, it bought 10 F-16 warplanes from Lockheed Martin Corp. for $660 million, the first major U.S. arms sale to Latin America after a ban in place since the Carter administration was lifted in 1997.

COLOMBIA: Fighting the drugs trade that fuels Latin America's oldest guerrilla war, Bogota spends the most on defense as a share of GDP in the region, around 4 percent. Last year military spending was record $6.6 billion.

Colombia said in 2007 it planned to buy new helicopters and aircraft after approving a $3.7 billion, four-year plan to upgrade its military. Washington has funneled around $6 billion in mainly military aid to Colombia since 2000.

ECUADOR: Ecuador's President Rafael Correa has ramped up his defense budget since taking office in 2007, increasing it to 2.9 percent of GDP that year and spending a record $1.36 billion last year.

He says he plans to beef up the country's air force to protect its porous border with Colombia. The new equipment may help placate Ecuador'soften unruly military officers. Ecuador said in 2008 it will pay $280 million for 24 warplanes made by Brazil's Embraer. The deal came as tensions lingered with neighboring Colombia over a military incursion.

Source: Stockholm International Peace Research Institute

(Compiled by Jijo Jacob and Frank Jack Daniel in Caracas and the Bangalore Editorial Reference Unit)

FACTBOX: Major arms deals by Latin American countries | Special Coverage | Reuters


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Apr 11, 2010
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Internal Conflict Drives Latin American Arms Market

NEWTOWN, Conn. | Latin American defense spending is expected to grow from approximately $63 billion in 2011 to more than $65 billion by 2014, according to Forecast International's "The Military Market for Latin America" report. While these figures appear optimistic, "in general, only about 20 percent of a military budget may actually be available for procurements, with the rest tied up in salaries and sometimes social security or pension funding," said Latin America & Caribbean analyst Rebecca Barrett, the report's author.

Traditionally, arms sales to Latin America have been subject to economic conditions, but the region has finally emerged from a downward cycle and has shown stability through the most recent global recession. Thus prospects for the defense market are showing improvement.

Internal conflict remains the primary driver behind the Latin American arms market. The region as a whole faces minimal external threat; armed guerilla groups pose the real peril to regional stability. However, many of these homegrown guerilla groups are no longer contained within the confines of their own nation and continue to increase in militancy.

"As violence spills over the borders, the governments of Latin America must push for enhanced military capabilities to fight back," Barrett said. "It is this internal conflict that is driving the long-overdue force modernization for the region."

Nonetheless, the need to revitalize force structures continues to increase. So far, Chile is the only nation in the region to really claim success in this effort. Though the nation is closing in on the end of its procurement cycle, Brazil is quickly moving up the ranks as the next major sales prospect in the region. Seeking to boost its position as a global superpower, Brazil's need to modernize its armed forces is pressing. Between protecting its vast offshore oil fields and resource-rich Amazon from terrorist groups, Brazil must rely on its military to protect its national sovereignty and secure its wealth.

Venezuela remains another bright prospect, but it should be noted that the majority of Venezuelan arms will need to be financed. Russia has undeniably dominated the Venezuelan market recently with sales reaching as high as $6.6 billion if all current contracts are carried out.

"Russia is pushing hard for domination of the Latin American arms market and has been successful because of the flexible financing options and wide array of equipment offered at reasonable prices," said Barrett. "In addition to Venezuela, Argentina and Peru are also emerging as lead buyers of Russian hardware."

Though each country has a unique set of needs to address, according to Barrett, "Almost every Latin American country is in need of greater surveillance and interdiction capabilities, whether for land, air, or sea operations." Primarily operating in the dense jungles and remote locations throughout Latin America, the guerillas and terrorist groups face nominal interference from the military due to a lack of adequate surveillance. Until these needs are addressed, the region will continue to be held hostage by its own internal security situation.

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