The Latin American arms market: procurement down, modernization down.

The Latin American Arms Market

Latin America is an extreme example of the current trend in the armaments business. Governments in the region are increasingly strapped for cash, with no lowering of perceived threats to their security. Purchases of new military weapons platforms are therefore being increasingly supplanted by less costly programmes to update existing inventories.

While procurement of new warships and combat aircraft is, in most cases, being delayed or postponed indefinitely, business is thus booming for western suppliers of new weapons and equipment for in-service systems.

The end of the Iran-Iraq war has brought several members of the Latin American arms industry to the brink of ruin. This is particularly true of Brazil, where Engesa had become dependent on continuing sales of AFVs to both sides, and Avibras had come to rely on its exports of artillery to Iraq. Both have now filed for protection from their creditors. (Engesa could be saved by a Saudi order for 315 Osorio MBTs, but faces stiff competition from General Dynamics Land Systems, with its M1A1 Abrams.)

According to the US Arms Control and Disarmament Agency (ACDA), US$ 17.575 billion-worth of arms were transferred to Latin America between 1983 and 1987, the last year for which it has published figures. Annual imports to the region during the five-year period rose from US$ 3.4 billion in 1983, in current dollars, to a peak of $ 4.1 billion in 1984. Arms imports dipped the following year to $ 3.7 billion, and dropped to a low of $ 3.0 billion in 1986, before rising again in 1987 to $ 3.4 billion.

The ACDA's league of exporters to the region in 1983-87 was headed by the Soviet Union ($ 9.4 billion), West Germany ($ 2.2 billion), the United States ($ 1.9 billion), Non-Soviet Warsaw Pact countries ($ 1.4 billion), Developing nations ($ 0.9 billion), and France ($ 0.8 billion).

The major recipients were Cuba ($ 8.38 billion, mostly from the USSR and Warsaw Pact); Nicaragua ($ 1.97 billion, mostly from the USSR); Argentina ($ 1.70 billion, 82% from West Germany); Venezuela ($ 1.09 billion, mainly from the USA and Israel); Peru ($ 1.06 billion, 40% from the USSR, 32% from France and 12% from the USA); Colombia ($ 0.785 billion, mostly from West Germany); Brazil ($ 0.460 billion, mainly from the USA and France); Ecuador (also $ 0.460 billion, 47% from Italy, 17% from France and 15% from the USA); Mexico ($ 0.430 billion, mostly from the USA, followed by Israel); and El Salvador ($ 0.340 billion, 91% from the USA).

Argentina, with an inflation of 5300 percent, reduced its arms imports from a peak of $ 975 million in 1983 to only $ 30 million in 1986 and again in 1987. The Navy has suffered the most, with construction of its 3rd, 4th, 5th and 6th German Type of 1700 submarines halted, modernization of one of its two Type 209 submarines on hold, completion of its 5th and 6th German Meko 140 frigates stopped, and its only aircraft carrier to be disposed of instead of being refitted.

Development of the Army's 1000 km-range Condor II ballistic missile with Iraq and Egypt has been halted, and there is no sign of funds for the planned fitting of Oto-Melara Palmaria 155 mm artillery turrets on stretched TAM (German Marder IFV) chassis. The Air Force, however, has been upgrading its fleet of Mirage fighter-bombers. However, there are signs that the USA will shortly lift its ban on military exports to Argentina.

Brazil, the developing world's largest debtor ($121 billion), has now finally taken delivery of the Avibras Astros II multiple rocket launcher for its Army. The Navy, for its part, is to rent four frigates and a landing ship from the US, and is evaluating competing bids to update the Sea Cat air defence missile systems aboard its six Niteroi-class Vosper Thornycroft Mk. 10 frigates. Competitors include BAe (Sea Wolf), General Dynamics (Standard), IAI (Barak) and Thomson-CSF/Matra (with a combination of Crotale Naval and Mistral).

The Chilean Air Force, with IAI assisting ENAER, is slowly modernizing its 16 Mirage 50s to Pantera 50CN status with the addition of canards and new avionics. The two firms are also modernizing Chile's 16 F-5E/Fs, including integration of Rafael Python 3 air-to-air missiles. Negotiations are under way for the supply by IAI of two Boeing 707 tankers and two Phalcon AEW aircraft. BAe is pursuing a possible Chilean order for Hawk 200 fighter-bombers, using an offer of subcontract work to ENAER on the Hawk, Tornado and Airbus as a carrot. The Navy has had to postpone construction of six Israeli Reshef missile attack craft, the purchase of four more ex-British Leander-class frigates, and two more German Type 209 submarines. The army, on the other hand, has just ordered Crotale NG SAM systems from Thomson-CSF, to supplement its British Blowpipes.

Colombia has now bought a second batch of six Kfir fighter-bombers from IAI, which is helping to upgrade the country's 16 Mirages. Its Army is receiving substantial foreign aid and special forces advice from the US, Britain and France, to aid in the drugs war, and has purchased 10 Sikorsky Blackhawk helicopters. The Navy is in the market for a number of new patrol craft, having recently had one of its two Type 1200 submarines refitted in Germany.

Venezuela, which has Latin America's third largest defence budget after Argentina and Brazil, is able to equip its more modest armed forces relatively well. Its Air Force has recently been modernizing its 21 Mirages and is about to start an update programme for its 12 F-5s. The Navy is currently refitting its two Type 209 submarines, and has announced a modernization programme for its six Fincantiere Lupo frigates, plus a requirement for six to ten new 800-tonne offshore patrol vessels. Both the Lupo modernization and the OPV contract are likely to be the subject of intense competition by western yards.