Latin American Defense Plans Move Forward Despite Recession

Although Latin American country budgets have been cut, defense spending for the most part has not. Despite the global recession, Latin American defense spending between 2010 and 2014 is expected to total some $267.8 billion, with Brazil taking the lead with a projected defense budget of $121 billion during the period, according to Forecast International's "The Military Market for Latin America."

This is particularly good news as funding obstacles have long limited Latin American defense plans. Nearly every Latin American nation has plans to replace or upgrade its creaky force structure, with some countries having more success than others.

The Latin American "arms race" is based on necessity rather than threat, and rumors of a regional arms race have been circulating for the past few years. However, fears of an arms race "could prod governments to finally address longstanding force structure revitalization needs," said Forecast International's Latin America and Caribbean analyst Rebecca Barrett. "Brazil, for example, had two ambitious programs that were dropped from defense plans and budgets that were suddenly resurrected as of 2008."

With a stable economy that appears to be pushing through the recession quite well, Brazilian defense plans are moving along accordingly. Years of strict budgeting have put Brazil in a position to finally advance the Navy's nuclear submarine program and the Air Force's fighter requirement.

Not all countries have been as fiscally conservative. Venezuela, for example, has exhibited no financial restraint since President Hugo Chávez came to power more than 10 years ago. When oil prices were booming, that was not an issue; however, now that windfall oil profits are nearly dried up, Venezuela is forced to pursue loans for weapons procurements or to put procurement plans on hold. So far, President Chávez has managed to secure a $2.2 billion loan from Russia to be spent on Russian-made equipment. "If the past holds true," Barrett notes, "just because an agreement has been signed does not mean financing will actually be made available." Regardless, Chávez is not likely to back down from his plans any time soon.

The region as a whole is paying more attention to internal and regional security. In this regard, most weapons acquisitions are aimed at terrorist organizations, while governments are striving to create collective security agreements to promote regional security in a peaceful manner. Surveillance systems of all types are a priority, as are the aircraft and patrol boats on which the systems could serve.

While limited budgets have hindered procurement plans over the years, those restrictions have also turned Latin American militaries into canny buyers. These governments are skilled at seeking the most cost-effective solutions and as a result have weathered the recession well with limited effects on defense spending.