The manufacture of armaments is a relatively recent phenomenon in Latin America that has enabled the hemisphere's countries to reduce their dependence on external markets. Latin America's major arms makers are Argentina, Brazil, and Chile. Under military rule, each of these countries built up its own self-sufficient weapons industries to make handguns, rifles, machine guns, hand grenades, armored personnel carriers, combat aircraft, tanks, submarines, patrol boats, missiles, rockets, and sophisticated communications gear. During the cold war the United States and the Soviet Union specialized in high-technology systems, leaving low-tech weaponry to advanced developing countries such as Argentina, Brazil, and Chile. The world was never short of regional wars and authoritarian regimes, particularly in Africa, Latin America, the Middle East, and Asia, which offered expanding markets.
In the early 1980s the world arms market surpassed $50 billion annually. The U.S. Arms Control and Disarmament Agency has estimated that Latin America's share of the world arms market at that time was less than 10 percent. Brazil alone accounted for between 6 and 8 percent of the world's total, or more than 90 percent of Latin America's exports. Brazil, as the most diversified exporter, annually sold as much as $2 billion worth of aircraft, armored cars, missiles, rocket launchers, and communications equipment. The Middle East was its major buyer. In 1985, Iraq alone spent more than $1 billion to import various systems of Brazilian armament. As of 2007 Argentina sells rockets, missiles, and low-flying reconnaissance aircraft. Chile's main exports are explosives such as mines, cluster bombs, and aircraft bombs. In Argentina armament manufacturing was a state-owned military enterprise, whereas in Chile and Brazil private firms predominated in the arms business.
The rise of the arms industry in Latin America resulted from a number of factors: sanctions and embargoes imposed by the United States for political and ideological reasons, a desire to attain self-sufficiency, and as a natural outgrowth of successful industrial economies. Argentina began the General Directorate of Military Factories (Fabricaciones Militares), its chief arms maker, during World War II as a way to substitute domestic arms for imports. U.S.-Brazilian fallout during the administration of Jimmy Carter (1977–1981), Brazil's industrial capabilities, and growing demands from overseas markets all fueled the arms industry boom. When the United States and Europe refused to sell arms to Chile's Pinochet regime (1973–1990), Chile developed a self-sufficient domestic weapons industry. The military regimes of the Southern Cone countries were able to meet their own internal security needs.
The Brazilian arms industry was built around 1,000 private firms and 400 producers of components. In its heyday it was producing an aircraft every twenty hours, an armed personnel carrier every eighteen hours, and 1,000 weapons systems per week. Embraer, the air force's aircraft manufacturer, alone had more than 500 component suppliers. The country's twenty shipyards produced submarines, patrol boats, and tankers, working through some 400 suppliers. After the late 1980s, however, Latin America's arms industry fell on hard times as the cold war and the Iraq-Iran (1980–1988) ended, and newly installed civilian regimes in the developing world cut back on military spending.
In 2005 the top fifteen countries with the most generous military expenditures spent $1.16 trillion. For Latin America, the military budget increased by 31 percent from 1996 to 2005. In dollar terms, South America spent $15.7 billion in armament in 1996 and $20.6 billion in 2005. Brazil's military budget, which stood at 1.7 percent of its gross domestic product (GDP) in 2000, is the continent's biggest. In this respect it is far behind Jordan and Israel, which respectively spent 8.87 percent and 8.39 percent of their GDPs. The United States spent 3.07 percent.
Embraer of Brazil is the only Latin arms manufacturer among the world's 100 largest weapons makers. It sold $390 million worth of arms in 2005, accounting for 10 percent of the company's sales, and ranked fifty-fifth in the world in 2005. U.S. and European firms together claimed 93.9 percent of the global arms sales (63.3 percent and 30.6 percent, respectively); Brazil's share is a minuscule 0.1 percent.
Dual use of civilian technology in information technology has made countries such as Singapore, Korea, Taiwan, and Malaysia rising players in global arms manufacturing, but no country in Latin America can claim that role. As the result, major Latin American countries have opted to import.
Venezuela, Peru, Argentina, Cuba, and even Mexico have imported arms from Russia: Sukhoi jets, Antonov transports, Mi-17 and Mi-25 attack helicopters, tanks, armored vehicles, and AK rifles have become staple imports. Russia's exports to Latin America rose from U.S.$300 million to $600 million between 1998 and 2005, according a U.S. congressional report. Venezuela's purchase of 100,000 Kalishnikov assault rifles, fifty attack helicopters, and twenty-four SU-30 (Sukhoi) jet fighters in 2006 brought Moscow $3 billion but rattled its other nations, including the United States (Sánchez 2007b). The Russians are also building an AK automatic rifle factory in Maracay that will make Venezuela the first Latin American country to be self-sufficient in the firearms (Sánchez 2007b). Mexico, too, bought Antonov transports, Ural heavy-duty trucks, and Mi-17 and Mi-25 helicopters from Russia (Sánchez 2007b). Generally, it is less expensive to buy weapons from Russia than from the United States or Europe.
Chile has bought arms from the United States and European nations. Its purchase of a fleet of F-16s from the United States drew the ire of Peru, Bolivia, and Argentina, their traditional foes and rivals. Under the Chilean law, 10 percent of the profits from the state-owned copper mining company (CODELCO) is earmarked to the armed forces (Sánchez 2007a). With the high price of copper ($3.00 per pound at the end of 2006), the Chilean military spending spree has modernized its arsenal: The navy received eight frigates—four from the Netherlands and four from Britain—as well as two submarines from a Franco-Spanish consortium; the army received 118 Leopard IIA4 tanks from Germany at the cost of $100 million; and in addition to the ten F-16s from the United States, the air force also acquired eighteen secondhand aircraft from the Netherlands (Sánchez 2007a).
Fueled by profits from high oil, gold, and base-metal prices, Latin America has begun to spend money to acquire information-age weaponry. In addition to this, Brazil is capable of producing nuclear arms, although in public it has adhered to the terms of the Nuclear Nonproliferation Treaty, the Tlatelolco Treaty (Latin America's treaty to keep the continent free from nuclear weapons), and the agreement of the Nuclear Suppliers Group. The Brazilian air force reportedly has built at least two atomic bomb devices (between 20 to 30 kilotons); its navy has perfected indigenous techniques of enriching uranium, and the army has continued to play a role in civilian nuclear research (Feldman 2006). As late as 2006, Brazil resisted the International Atomic Energy Agency's inspection of its centrifuges at Resende (Feldman 2006). After the early 1990s, due to the "lost decade" of economic recession, the return of civilian democratic governments, the end of the cold war, and the lack of advanced information technology and chemical technologies, Latin America's arms industry fell on hard times.
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