INTELLIGENCE MEMORANDUM - THE LATIN AMERICAN ARMS MARKET

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000500180020-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 45
• Document Creation Date: December 9, 2016
• Document Release Date: March 5, 1999
• Sequence Number: 20
• Publication Date: December 1, 1975
• Content Type: IM

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NOFORN
(Soo inside cover)
Intelligence Memorandum
The Latin American Arms Market
Secret
ER IM 75-21
December 1975
Copy N2 69
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NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
DISSEMINATION CONTROL ABBREVIATIONS
NOFORN- Not Releasable to Foreign Nationals
NOCONTRACT- Not Releasable to Contractors or
Contractor/ Consultants
PROPIN- Caution-Proprietary Information Involved
USIBONLY- USIB Departments Only
ORCON- Dissemination and Extraction of Information
Controlled by Originator
REL... - This Information has been Authorized for
Release to.. .
Classified by 015319
Exempt from General Declassification Schedule
of E.O. 11u52, exemption categorys
? 5B(1), (21, and (3)
Automatically declassified on:
date impossible to determine
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The Latin American
Arms Market
In the late 1960s, many Latin American countries initiated major programs to
modernize Their arms inventories. These moves reflected growing national competi-
tion for hemispheric leadership, the fueling of intraregional rivalries, and often the
desire of military governments to enhance their prestige. Foreign arms purchases
reached an average of $600 million per year in 1970-74, a twofold increase over the
previous 5 years. Advanced naval craft and jet aircraft, ordered mainly by Argentina,
Brazil, Peru, and Venezuela, made up about three-fourths of the total new orders
(see Figure 1).
LATIN AMERICA: Arms Agreements, 1970-74
TOTAL: US$3.0 Billion
Note: Comments and queries regarding this memorandum are welcomed. They may
be directed to of the Office of Economic Research, Code 143,
Extension 5291.
25X1A9a
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Despite the large jump in procurement, Latin America remains the smallest
arms market among LDC regions, accounting for 8% of total LDC military pur-
chases. In the Near East, Iran, Israel, and Saudi Arabia each purchased more arms in
the 1970s than all of Latin America.
West European countries have won more than two-thirds of the arms contracts
awarded since 1969, moving into a market previously dominated by the United
States. The substantial shift resulted from aggressive European sales tactics, US
restrictions on sales availability of US credit, and a concerted effort of major Latin
American arms purchasers to reduce their dependence on the United States. Wash-
ington was able to hold on to a 25% share of the market-still the largest for any
single country-mainly because of sales of follow-on equipment and spare parts for
weapons already in Latin American inventories.
For the rest of the decade we expect Latin America's arms p i)rchases to average
about $1 billion per year, or two-thirds above the 1970-74 annual average. Wr?
believe most of the higher dollar outlays will be attributable to rising prices for
sophisticated equipment and the need for more follow-on support. We do not expect
much of an increase in the quantities of equipment ordered, primarily because of
balance-of-payments and fiscal constraints. Several major countries will be seeking
licensing and local assembly arrangements to replace direct imports of weapons.
Western Europe will continue to garner the bulk of the armament contracts
despite recent liberalization of US policies. The United States cannot provide much
of the equipment desired, because of continuing export restrictions and ey,irt:ing
commitments.
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1. Latin Americas was the last of the 'Third World continental regions to
acquire sophisticated weapons. Spared the arsenal building problems of newly inde-
pendent states and operating for decades under Washington's security umbrella,
Latin American inventories were of World War 11 and Korean vintage until the late
1960s.
2. At that time, arms modernization programs were triggered by desires to
compete with other LDCs for the prestige of owning advanced weaponry. Latin
American countries also sought new weapons because of real or imagined threats to
their sovereignty.
? Argentina and Brazil wanted to enhance their prestige, as part of their
traditional competition for hemispheric leadership and influence.
? Colombia and Venezuela were preparing for possible conflict over dis-
puted territorial sea and continental shelf boundaries in the Gulf of Vene-
zuela and other border problems.
? Venezuela also wanted to fill a power void in the Caribbean, following
British and Dutch departure.
? Chile and Peru have been at odds because of continued animosities over
seizure of Peruvian territory nearly 100 years ago.
? Bolivia felt that the Peruvian-Chilean conflict might spill over to its terri-
tory.
? Ecuador feared a Peruvian seizure of oil deposits near their common bor-
der.
3. Arms orders soared in 1969, and in 1970 they reached the $900 million
mark. Between 1970 and 1974, equipment orders remained high-averaging $500
million annually, compared with $200 million a year during 1960-68. Purchases in
1975 may reach a record of $1 billion because of large Venezuelan and Argentine
orders for ships and an Ecuadorean deal for ground equipment (see Figure 2 and
Appendix B).
1. Including all independent Latin American countries except Cuba. For recent patterns of arms procurement
in individual Latin American countries, see Appendix A.
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LATIN AMERICA: Arms Agreements
4. Six countri:~s-Argentina, Brazil, Chile, Ecuador, Peru, and Venezuula-
ordered $2.7 billion w...?th of arms during 1970-74, nearly 90% of the Latin Amer-
ican total. Brazil's share alone was 30% and Peru's about 20%. Colombia, Bolivia,
and Mexico accounted for most of the remainder.
5. Like other Third World arms purchasers, Latin American countries have
sought costly high-technology ordnance. Almost three-fourths of the orders have
been for naval ships and aircraft, including destroyer escorts equipped with guided
missile systems and Mach-2 jet fighters (see Figure 3). Because sophisticated equip-
ment accounts for a large part of Latin America's orders, long lead times have
delayed deliveries. Annual deliveries in 1973 and 1974 averaged $460 million as
orders placed in the late 1960s and early 1970s were received.
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LATIN AMERICA: Arms Purchases from Non-US Sources,
by Major Category of Equipment, 1966-74
goes "S.,
r
D~~truY ,.,
i,W' Is ever
TfeieuI/ r,
`114.1
ieg$ Pons
:206
, Jet , Fighters.
a d;
:';B.M1en;'.
400,
NAVAL AIRCRAr( GROUND FORCES MISSILE SMALL ARMS
COMBATANTS SYSTEMS AMMUNITION.
SUPPORT
EQUIPMENT. AND
SPARE PARTS
Suppliers
The United States
6. Until 1969, Latin America's armed forces were almost entirely equipped
and trained by the United States. Western Europe has subsequently provided most
of the region's arms import needs.2 The United States accounted for less than
2. For a listing of arms agreements, sec Appendix C.
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one-fourth of Latin America's total purchases during 1969-74, while the West Euro-
pean share rose to two-thirds.3 Latin America's share of US arms sales to the Third
World also declined, from 10% in 1962-68 to 5% in 1969-74. The United States
continued to be the largest single supplier, with sales of about $130 million annu-
ally, up slightly from $100 million a year during 1962-68.
7. Although most West European sales since 1969 have been of new equip-
ment, about 60% of US sales represent spare parts and technical assistance. The
disparity in the mix of US sale; reflects the need to maintain both US equipment
purchased before 1969 and recently purchased used equipment.
8. Three-fourths of US sales in 1969-74 went to Argentina, Brazil, Chile,
Peru, and Venezuela. In each of these countries except Argentina, the United States
was outsold by at least one West European supplier.
9. Reduction in the share of US participation in Latin America's arms
reflected several currents in US arms exports:
? In 1968 the Foreign Assistance Act restricted the total value of grant
military assistance to $25 million a year;
? At the same time, a ceiling of $75 million was imposed on cash and credit
sales under the Foreign Military Sales (FMS) program; and
? Sales of sophisticated equipment were expressly forbidden.
Subsequently the FMS ceiling was raised by steps, beginning in 1972. By 1974 the
credit ceiling was raised to $200 million, with no limit on sales. Not until June 1973,
however, did Washington sanction the sale of high-performance (F-5E) jet aircraft to
Latin America. Five countries (Argentina, Brazil, Chile, Colombia, and Peru) were
offered the aircraft. In 1974, other advanced weapons systems, such as the M-60
tank and TOW antitank missile system, were added to the sales list.
10. The US share of Latin American arms purchases promptly increased
from 30% in 1972 to more than 40% in 1974. The US share will drop in 1975,
;,owever. Washington cannot provide important types of naval craft sought because
of previous commitments and US export barriers. Included on the list which the
United States is unable to provide are advanced missiles, tanks, destroyers, and
conventional submarines.
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11. The United States remains the major source of foreign technical services
to Latin American military establishments in spite of its reduced role as an arms
supplier. In 1973, for example, 300 American technicians were assigned to Latin
American countries, compared with 200 West Europeans. The Americans perform a
more direct service to national armed forces through their training missions, equip-
ment installation, and maintenance operations. West European technicians are em-
ployed principally on weapons co-production and weapons assembly operations.
Western Europe
12. While the United States has been restricting its arms sales, West Euro-
peans have been actively promoting theirs. The West Europeans have encountered
receptive customers, especially where the governments were anxious to reduce their
dependence on the United States. West European governments have encouraged s,.les
through credit arrangements that compare favorably with US FMS sales and through
contracts that permit lenient assembly and licensing agreements. Aggressive Euro-
pean agents sold aims to Argentina when US supplies were cut off after the 1966
military coup. France offered Peru advanced Mirage aircraft following Washington's
refusal to sell high-performance jet fighters in 1967.
Western Europe's major arms deals with Latin American countries (1966-74):
Argentina placed orders in France for Mirage fighters, its first supersonic aircraft, and helicopters/
in Britain for Canberra jet bombers, helicopters, and transport planes; and in the Netherlands
and Italy for transport aircraft.
Brazil's orders included MK-10 frigates, Oberon-class submarines, and HS-125 transports from the
United Kingdom; S::hultz?cla.ss minesweepers from West Germany; Mirage HIS from France; and
7.4B-326G jet trainers from Italy, for assembly in Brazil.
Peru's 1967 pui:;hase of 14 French Mirage Vs and 2 Mirage III fighters made Peru the first Latin
American country to have supersonic aircraft. Since then, its purchases in France.include AMX
tanks, the Exocet ship-to-ship missile system, and Alouette helicopters. From Britain, Peru bought
bombers and destroyers and,from West Germany, armored personnel carriers (APCs), submarines,
and the Cobra antitank missile system.
Venezuela bought Vosper-T'iornycroft patrol boats from the United Kingdom; submarines. from
West Germany AMX 30 tans, APCs, self-propelled 155-mm guns, and howitzers from France;
and antiaircraft guns from Sweden.
13. Several La min American buyers have been dissatisfied with the postsale
services provided by West European arms suppliers. Peru and Colombia, for example,
have been displeased with French follow-on support for Mirage jet fighters. French
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postsales indifference to unexpected add-on ,harges for w.:vpons, spare parts, and
support and maintenance has also created animosity. Paris has been lax in delivering
spare parts and has exacerbated difficulties by requiring the return of engines to
France for overhaul. The United States, on the other hand, is known to meet its
contractual obligations and offers strong postsales support for equipment it supplies.
It staffs its military assistance groups with qualified technicians and monitors and
enforces all aspects of arms contracts.
14. West European countries, as a group, sold $2.4 billion worth of arms to
Latin America during 1969-74-mostly high-unit-cost, sophisticated combat equip-
ment. Their sales to Latin America peaked in 1970 at almost $800 million because
of large sales to Brazil, Argentina, and Colombia. One-half of the aircraft and ground
forces equipment in Latin America and about 80% of the naval craft come from
Western Europe. The United Kingdom, France, West Germany, and Italy have been
the major suppliers.
15. Another high year for West European arms sales to Latin America (over
$1 billion) appears to be in the making in 1975. In May Venezuela was close to
signing Latin America's largest arms accord-a $433 million order for 6 Alpino-class
frigates from Italy. In June, Great Britain's most lucrative deal in the area was
concluded, a $379 million Argentine order for six Type-21 frigates. Early this year,
France became Ecuador's major source of arms with a $120 million sale of AMX-13
tanks, armored vehicles, and the Magic air-to-air missile system, whici:: is to be used
to arm Jaguar jet fighters bought from the United Kingdom in 1974.
16. Less than 10% of Latin America's foreign arms purchases ($375 million)
were made from countries outside of Western Europe and the United States. Canada
has sold Latin America transport and jet fighter aircraft worth about $175 million.
Most of these planes were sold between 1967 and 1971. In 1973-74, Israel supplied
transport planes to four countries, and Brazil has provided ground forces equipment
to Chile.
17. Pena in mid-1973 became the first and so far the only non-Communist
country in Latin America to sign a militarl agreement with Moscow. In the two
years since the deal was concluded, the USSR has delivered $40 million worth of
tanks and ground forces equipment. Also, some $30 million worth of MI-8 heli-
copters ordered in early 1975 were delivered. In the early 1970s, Moscow had
offered military assistance to the Allende regime in Chile, but was turned down
because Chilean military leaders wanted to avoid establishing a dependent relation-
ship.
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Latin America's Arms Transfers
18. The more industrialized Latin American nations are developing their own
military industrial establishments, often through licensing and assembly agreements
with West European countries.4 Licensing and assembly agreements enable the
manufacturer to produce armaments locally, frequently using foreign components
for all or part of the finished weapons. These arrangements are intended to ?,ave
foreign exchange, to upgrade domestic technical capabilities, and to adapt weapons
systems to local needs.
19. Ten Latin American countries are able to manufacture a variety of in-
fantry weapons, small arms ammunition, and quartermaster supplies. Only Argentina
and Brazil approach self-sufficiency in the supply of these items. Brazil has also
begun to export some military equipment to its neighbors and in 1970 completed a
$50 million sale of armored vehicles to Libya. A few complex modern weapons are
produced from foreign designs, but production is limited by high start-up costs for
development, by technology, and by chronic shortages of skilled manpower and
critical materials.
Impact of Defense Spending on Latin American Economies
20. Because Latin America has been remarkably free of major military con-
flicts, it has consistently spent a smaller proportion of its gross national product
(GNP) on defense than other developing areas. Between 1966 and 1972 the average
annual outlay held at about 2% and since then has dropped to less than 1.5%.
Average expenditures of Third World nations were 5% and for the Middle East
countries almost 12%. Even the average ratio of defense expenditures to GNP of the
five major Latin American powers is less than one-half of the Third World average.
21. Latin American military %:sdgets generally allow 10%-15% of total ex-
penditures for procurement of foreign2 arms. By spreading deliveries and repayments
over a number of years, countries have made large arms purchases without seriously
straining their balance of payments. The annual payment on the military debt has
increased to about $300-$400 million during the last three years. Nevertheless, Latin
American countries should be able to meet current. repayment schedules without
jeopardizing economic development.
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Prospects
22. We expect Latin American arms purchases to run about $1 billion annu-
ally through 1980, compared with $600 million a year during 1970-74. Higher
outlays principally reflect increased prices for sophisticated weapons systems and
growing requirements for follow-on support. We anticipate no large increase in the
quantities of equipment ordered. Most countries, confronted with balance-of-pay-
ments problems, are shopping cautiously and are looking for licensing and assembly
arrangements to replace direct imports. Projected procurement levels could be sur-
passed, however, if tensions between countries such as Chile and Peru were to
increase. The armed forces would then press to accelerate purchases of advanced
armaments, including such items as the Mirage F-I jet fighter.
23. Western Europe will continue to take two-thirds, possibly more, of the
Latin American arms market. As the traditional source of new tonnage for Latin
American navies, Europe will continue to benefit from large allocations for ship
purchases. Europe's share of the important follow-on equipment and spare parts
markets will also climb as inventories of West European military hardware increase
throughout the area. Although Latin America has shown preference for US aircraft,
West European suppliers will get a somewhat larger share of the contracts because
they offer a wider variety of equipment and faster delivery. US governmental restric-
tions on the sale of certain sophisticated weapons systems as well as commitments
already made for US forces and Middle Eastern customers will also restrict the level
of sales.
24. West European countries will step up their sales efforts to help support
their defense-related industries. Shipbuilding contracts, including those for gaided-
missile destroyers, frigates, conventional submarines, and patrol boats, will go
mainly to British, Italian, and West German shipyards. French Mirage series aircraft
and helicopters, British Jaguar ground support jet fighters, and Italian jet trainers
will be most competitive with aircraft available in the United States.
25. Local arms production will continue to be confined largely to Argentina
and Brazil, which will be able to meet their requirements for small arms, ammuni-
tion, and some ground, naval, and aircraft equipment. Brazil may even be able to
export more military equipment than it imports by the late 1970s. It is now trying
to sell armored vehicles and transport aircraft to Canada, Japan, Turkey, and several
Arab states.
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Argentina
Piqued at the United States for suspending arms deliveries in the aftermath of
the 1966 military coup, Buenos Aires initiated Plan Europa to tap West European
arms suppliers. About 65% of some $475 million in new orders was placed with
Western Europe, while the US share went down to 35%. By comparison, during
1956-65 the United States had accounted for more than 80% of the equipment
purchased. Although Plan Europa was introduced in 1966, major purchases were not
made until the 1970s, as shown in the tabulation:
Million US S
Total
1966-74
1966-69
1970-74
Total
475
145
330
United States
165
50
115
Western Europe
310
95
215
West Germany
50
20
30
France
75
15
60
United Kingdom
105
25
80
Netherlands
50
25
25
Italy
25
5
20
Other
5
5
Negl.
During 1966-74, Argentina ordered more than $150 million of naval equip-
ment, 85% from Western Europe. The naval air arm also acquired sophisticated
foreign equipment. In addition to a squadron of US A-4 jet fighters and a recondi-
tioned Dutch aircraft carrier, Buenos Aires ordered Alouette III helicopters and
AS-1I and AS-12 air-to-ground missiles from France and Aeromacchi MB-326K jet
trainers from Italy. Argentina is now shopping for US S-2E antisubmarine warfare
aircraft.
The air force placed $150 million worth of orders that include:
? reconditioned Canberra jet bombers, Sky Van and HS-125 transports, and
Westland helicopters from the United Kingdom;
a a squadron of Mirage jet fighters and Alouette helicopters from France;
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? twin Otter transports from Canada;
? MB-326 jet trainers and G-222 transports from Italy; and
? transports from the Netherlands.
Plan Europa a!so envisioned the acquisition of West European technology for
local production, or at least for the assembly of weaponry in Argentina. Although
far smaller than Brazil's effort, licensing agreements with foreign firms enabled
Argentina to set up plants for assemblying the following types of equipment:
? French AMX-series tanks, APCs, and 155-mm howitzers;
? Swiss MOWAG armored vehicles;
? West German 209-type submarines, Saar-class fast patrol boats, and
trucks; and
? the second of two British type-42 guided missile destroyers.
Recently, Argentina built a prototype APC resembling the British Saracen as
replacement for M-5 US half-tracks and developed a prototype wire-guided surface-
to-surface missile system. It is developing a main battle tank, comprising the best
features of the US M-48A3 and M-60 tanks and other foreign tanks.
In mid-1975, Argentina purchased six type-21 frigates valued at about $380
million from the United Kingdom. Construction of the frigates is scheduled over 10
years and will incorporate some equipment produced in Argentina. In spite of this
large new order and purchases in 1974 of' Italian and Dutch transport aircraft, the
recent Peron regime has tried to curtail military imports and to expand domestic
output. Even with the prospect of a restoration of military control, Argentina will
probably seek additional arrangements with foreign firms to expand its capacity to
produce a wider line of items.
From 1966 through 1974, Bolivia spent only $40 million on foreign arms
procurement, 65% it the United States. Alarmed by the arms buildup in Peru and
Chile, Bolivia's military regime has ordered more than $20 million worth of equip-
ment thus far in 1975, including l ascavel armored cars and T-6 trainer aircraft from
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Brazil and Arava STOI, transports from Israel. La Paz is interested in a Soviet offer
that includes T-55 tanks at relatively low prices and favorable credit terms because
Washington has refused to increase sales.
Brazil has the largest and most advanced military establishment in Latin Amer-
ica and is by far the major arms importer. With recent annual defense expenditures
running at more than $1 billion (2.510 of GNP) and military personnel numbering
210,000, Brazil accounts for about one-fourth of Latin America's total defense
expenditures. Foreign military purchases totaling $860 million during 1970-74 re-
flect both the desire of Brazil's military government to modernize its pre-World War
II military establishment and the country's financial ability to support a larger
program.
To acquire sophisticated weapons that the United States refused to provide,
Brazil sought other supply sources in the late 1960s. The US share dropped from
two-thirds to about one-fifth of the market as Brazil placed orders elsewhere.
Total
1966-74
1966-69
1970-74
Total
1,090
225
865
United States
265
100
165
Western Europe
750
80
670
United Kingdom
470
55
415
France
170
10
160
Italy
60
....
60
Other
50
15
35
Other
75
45
30
Almost three-fourths of the orders placed after 1969 were for naval equipment
under a 10-year expansion program initiated in 1968. Brazil contracted to buy 33
ships, some of which were to be built in Brazil with foreign components. The most
important among these orders were:
? six MK-10 frigates (see Figure 4), valued at $350 million, and 3 Oberon-
class submarines from the United Kingdom-one submarine has been de-
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livered and two of the frigates have been launched (including one built in
Brazil)* but neither will be operational until 1976;
? four Schultz-class minesweepers from West Germany; and
? eight destroyers, an LST, a submarine, a rescue ship, and seven Guppy-
type submarines from the United States (all surplus).
The air force began a $300 million program in early 1973 to replace an aborted
one launched 5 years earlier. Brazil has placed the following orders for aircraft:
? France - 16 Mirage Ills in 1970 and a $70 million air defense and traffic
control radar system in 1972;
? The United States - 36 F-5Es in mid-1973, 36 Bell helicopters, and a
number of C-130 transport and S-2E antisubmarine warfare aircraft;
? Canada - 24 DHC transports;
? Italy - 112 MB-326G jet trainers for assembly in Brazil; and
? The United Kingdom - 10 HS-125 transports.
Brazil has the largest domestic arms industry in Latin America. This capability
has been created and supported through licensing and co-production agreements
* The 1970 agreement called for two of the vessels to be built in Brazil. High British costs may result in
Brazilian construction of a third.
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with at least nine foreign firms. Brazil has begun to rely heavily on domestic output
for small arms ammunition and quartermaster supplies, as well as for a wide range of
military hardware, including armored vehicles (see Figure 5). It also uses its own
shipyards to construct patrol boats and support ships and for refitting foreign-built
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ships in its inventory. Brazii'; local defense industry also is supplying light transport
and trainers for the air force. Unique among Latin American nations, Brazil is
developing foreign marke+_L for part of its arms output. During 1970-74, it sold $110
million worth of arms to foreign governments-$60 million to other Latin American
countries and $50 million to Libya.
For the next several years, Brazil is expected to limit new arms orders while it
assimilates recent purchases. It also is holding down military spending because of
budgetary and balance-of-payments constraints. We expect that:
? although the air force will not purchase additional aircraft in the next few
years, US Sidewinder missiles will be sought for use on Mirages;
? development of an air defense system may not be delayed by austerity
measures; and
? the navy will not place new ship orders for the present and will restrict
purchases largely to helicopters.
The only large-scale purchases that appear likely at present are Oto Melara
howitzers, for which Italy has offered a large credit, and additional French Roland
surface-to-air missile systems, now under negotiation (which Brazil. hopes to produce
eventually). During 1975, purchases have been limited to 9 Lynx helicopters from
the United Kingdom, Oerlikon guns from Switzerland, and some gun mountings
from France for use on upgraded US tanks.
Santiago has placed $485 million in foreign orders beginning in 1966, seeking
to upgrade its military equipment (see the tabulation). Still, its inventories, partic-
Total
United States
United Kingdom
France
Brazil
Other
Total
1966-74
1966-69
1970-73
1974
485
215
140
130
140
25
40
75
220
185
35
....
35
....
25
10
40
....
....
40
50
5
40
5
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ularly of jet fighters and tanks, are no match for those of Peru, which threatens
Chile's security with continuing irredentist claims. Chile's efforts at military mod-
ernization began in 1966, with the United Kingdom providing most of the equip-
ment, including:
? 2 Leander-class frigates,
? 2 Oberon-class submarines, and
? 2 squadrons of l-lawker-Hunter jet fighters.
During 1970-73 the progr im lagged as the military withstood pressure from
Allende to shift arms procurement to the USSR. Purchases in the West were limited
to a few naval craft, helicopters, subsonic jet fighters, and small quantities of ground
forces equipment. France was the major supplier, providing the Exocet missile sys-
tem, SA-330 (PUMA) helicopters, and self-propelled howitzers.
The junta that took over in December 1973 appealed to Washingtin for
military support, in part to ensure Chile's military parity with Peru. The United
States agreed in mid-1974 to supply 18 F -5s (see Figure 6) and. additional A-37
ground support aircraft because Chile was the only major state in the region without
supersonic fighters. Also in 1974 Brazil extended $40 million in long-term credits
for procurement of small arms, ammunition, trucks, and other military support
equipment produced by Brazil.
Among West European states, only France ha%, recently agn-ed to sell major
equipment. Under a $12 million 1974 accord, Paris agreed to provide several
Falcon-20 transports and AS-11 and AS-12 air-to-ground missiles. The British have
refused a new cash offer for Hawker-Hunter spare parts, although they are fulfilling
commitments under previous contracts. Negotiations with France for tanks have
stalled over credit arrangements, and discussions with the Dutch for an
antisubmarine patrol aircraft broke off because Chile could not finance it. Until
Santiago makes its regime rating more acceptable in West European capitals and
the country's credit rating improves, Chile will have to rely largely on the United
States for major arms supplies. The United States is now considering requests for:
? M-60 (see Figure 7) and M-48 tanks,
? 2 Sumner-class destroyers;
? TOW antitank missile system,
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? M-113 APCs, and
? Cobra helicopters.
Colombia
Colombia has
purchased more than
80% of its military
equipment from
Western Europe dur-
ing 1970-74; before
that, most of it came
from the United
16
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States. The major agreements with Western Europe are a $54 million order for 18
French Mirages and a $36 million contract for two West German sub.... ;Tines. Other
purchases in Europe include midget submarines from Italy and transport aircraft
from the United Kingdom and the Netherlands. The United States has supplied
several surplus destroyers and patrol boats, C-130 transports, Bell helicopters, and
M 113 APCs during the past 5 years. Because Washington refuses to supply Bogota
with certain sophisticated weapons, such as the TOW antitank missile system, it is
looking to Western Europe and is considering Soviet equipment, reportedly available
in return for coffee.
Since early 1974, Ecuador's military government has placed arms orders in
Western Europe and Israel totaling about $300 million. Supported by expanded
oil revenues, Quito's purchases during the past 2 years have been triple orders
in the preceding 8 years.
Satisfied with the performance of French armored equipment bought in 1970
and 1974, Ecuador concluded a $100 million agreement in early 1975 for 178
AMX-13 tanks as well as armored vehicles, support equipment, and ammunition.
This order represents the largest purchase of ground force equipment ever made
by a Latin American country. Other purchases since early 1974 include:
? 12 Jaguar tactical jet fighters (see Figure 8) from the United Kingdom,
Figure 8. Ecuador: British Jaguar Tactical Jet Fighters Ordered in 1974
17
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? 4 Lama helicopters and the Magic air-to-air missile system from France,
? 2 1,3' c-ton submarines from West Germany, and
? 6 A,a"a S201, transports from Israel.
Quito presently is negotiating with Israel and Italy for ammunition and mortars
and has shown interest in buying US F-5 and A-37B jet fighters, a destroyer, several
support ships, and some ground force cqu9ment. If an agreement is worked out,
US equipment would be offered under FMS for the first time since 1971, when
a ban on FMS credits was imposed on Quito under the Fishe-:nan's Protective
Act of 1967.
Peru has actively sought advanced weaponry to replace obsoleto equipment
and to keep alive its claims to territory lost to Chile. After Washington refused
to provide high-performance jet aircraft and modern tanks it'. 1966, Lima turned
to Western Europe and Canada. The French agreement to supply Mirage jets in
1967 made the P'" uvian air force the first in Latin America to have supersonic
aircraft and signaled the end of Washington's dominant supplier positir,;i in Peru.
Since then the United States has accounted for only about 30% of Peru's arms
purchases.
Total
1966-74
1966-69
1970-74
Total
760
230
530
Unit'd States
115
30
85
Western Europe
500
125
375
France
120
45
75
Italy
210
Negl.
210
Other
170
80
90
USSR
40
....
40
Other
105
75
30
Major orders placed in Western Europe and Canada include:
? France - Mirage V and Mirage III jet fighters (see Figure 9), follow-on
orders for AMX tanks, the Exocet ship-to-ship missile system, and
Alouette helicopters;
18
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Figuto 9. Peru: French Mirage Jet Fighters Bought in 1967
Mirage V
? United Kingdom - Canberra bombers, Wessex helicopters, and
reconditioned Daring-class destroyers;
? Italy - four missile-equipped destroyer escorts;
? West Germany - UR-416 ".PCs, two submarines, and the Cobra antitank
missile system; and
? Canada - transport aircraft.
Following US agreement in May 1973 to reintroduce major FMS arms deliveries
that had been cut off in 1967, Washington consented to provide A-37 jet fighters,
2 destroyers, Guppy submarines, and 140 M-1 13 APCs.
19
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In 1973, Peru became the first non-Communist Latin American nation to buy
Soviet ordnance. Lima turned to Moscow because it was unable to buy tanks
from the United States, and its requested ci9Iivery schedules could not be met
by West European suppliers. Soviet prices and repayment terms were favorable,
and Moscow agreed to provide fast deliveries. Peru's purchases of at least $40 million
worth of Soviet equipment under credit include more than 200 T-55 medium tanks
(see Figure 10), artlllcry, radar-controlled antiaircraft guns, rocket launchers, and
Figure 10. Peru: Soviet T-55 Tanks Bought in 1973
tank transporters. A new agreement also may have been reached with the USSR
in 1974 for additional ground. force equipment, including a surface-to-air missile
system (probably the SA-6). In early 1975 the Peruvian army also ordered 30
MI-8 helicopters from the USSR. Some 35 Peruvian military personnel reportedly
are receiving air defense training in the USSR, and 50 Soviet military advisers
currently are employed in Peru.
Because of exaggerated suspicions of a Chilean arms buildup and the hopes
of some Peruvian officers to regain territory lost to Chile more than a century
ago, the military junta in Lima has sought to place large new arms orders in the
United States, the USSR, Western Europe, Yugoslavia, and Israel.
Countries with which arms deals have been discussed recently include:
? Israel - for patrol boats, Mirage technical assistance, and logistical
support;
20
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SECRET
? Yugoslavia -- for artillery;
? 'West Germany - for the manufacture of UNIMOG vehicles in Peru;
? Spain - for Aviocar transport aircraft; and
? Belgium - for small arms and ammunition.
Venezuela
Venezuela began to upgrade its military capabilities in the early 1970s. Of
the $465 million worth of arms purchased during 1966-74, 90% has been ordered
after 1969. Almost $300 million was ordered in 1971-72 from France, West
Germany, and the United States.
As in most other major Latin Amerirar. countries, the Mirage jet fighter was
high on Caracas' shopping list. Acquisition of these planes, in 1971, was followed
by the purchase of Canadian CF-5 jet ground support aircraft. From the United
States, Vc- ,: acla ordered C-130 transports, jet trainers, and the OV-10
reconnaisam.,; aircraft (see Figure 11). The ground force arsenal was expanded
Figure 11. Venezuela: US OV-10 Reconnaissance Aircraft Ordered in the Early 1970s
through a $50 million arms deal with France for AMX-30 tanks (see Figure 12),
APCs, and self-propelled 155-mm howitzers. Contracts also were signed for Italian
105-mm pack howitzers, for US V-100 armored cars, and for Swedish 40-mm
L/70AA antiaircraft guns.
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In keeping with
Venezuela's desire
for leadership in the
Caribbean, its navy
contracted for Vos-
per Thornycroft fast
patrol boats from
the United King-
dom, submarines
IL VIIL ?/GJL vG1111d1SY,
and a destroyer, pa-
Venezuela: French AMX-30 Tanks Ordered in
trol boats, and an LST from the United States. Orders were distributed among suppliers
as shown below:
Total
1966-74
1966-69
1970-74
Total
465
35
430
United States
140
30
110
France
145
5
140
Italy
15
Negl.
15
West Germany
80
Ner!.
80
United Kingdom
35
Negl.
35
Other
50
Negl.
50
Foreign arms procurement fell off sharply in 1973-74. Since mid-1974, how-
ever, Venezuela's growing oil revenues have enabled the military services to increase
their arms procurement budget. In 1975, spending may reach a record $500 million.
Orders in 1975 will include a $433 million deal with Italy for the construction of 6
Alpino-class frigates. Caracas has expressed interest in buying British Scorpion tanks
and artillery and French support equipment, including missiles for AMX-30 tanks.
22
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Appendix Ii. Statiatleal Tables
Table 11.1
Value of Latin American Arm" Agreements; by Purchaser
Total
....... I?. . ...
Jan-Nov
1966-74
1970-74
1970
1971
1972
1973
1974
19752
Total
4,000
2,965
890
405
500
625
545
1,045'1
Argentina
475
330
155
40
60
30
40
380
Bolivia
40
30
NegI.
5
10
It)
5
20
Brazil
1, 1)0O
805
485
51)
190
60
80
35
Chile
485
270
25
30
46
45
130
....
Colombia
175
140
I05
10
15
5
5
Costa [licit
Negi.
Negi.
....
Negi.
NegI.
Dominican Republic
20
5
Negl.
Negi.
Negi.
Negl.
Negi.
NegI.
Ecuador
2(1(1
240
20
20
Negl.
45
155
125
h:1 Salvador
25
15
5
Negi.
Negi.
1(1
Negl.
Guatemala
35
25
Negl.
10
5
5
5
)(1
Guyana
Negi.
Negi.
Negi.
....
,...
....
....
....
Ilaitl
Negi,
Negi.
,...
Negi.
Negi,
Negl.
Negi.
Ilonduras
.fanmlea
20
Negi.
10
Negi.
Negl.
Negi.
Negi.
NegI.
Negi
Negi.
5
Negi.
Negl.
Negi.
....
Mexico
60
50
5
NegI.
NegI.
45
NegI.
Nicaragua
15
10
NegI.
5
NegI.
NegI.
NegI.
I'anauua
20
15
Negl.
NegI.
5
5
5
NegI.
Paraguay
15
10
NegI,
NegI.
NegI.
NegI.
NegI.
NegI.
Peru
7602
530
80
30
10
325
85
40
'T'rinidad and
Negi.
NegI.
Negi.
....
....
Uruguay
40
20
5
5
NegI.
5
5
Venezuela
465
430
5
200
165
30
30
435
a Sales and aid commitments. Data are for calendar years, except for the United States, which is by field year.
2 Preliminary.
a Excluding US sales and aid commitmentu, which might add as much as $200 million to the total.
Total
Total
4,000
2,965
890
x!05
500
625
545 1,045
United States2
1,070
710
75
115
150
1115
225 N.A.
West Europe
2,555
2,020.
795
225
:320
425
255 985
United Kingdom
1,005
680
430
25
80
85
60 405
France
650
570
195
165
100
35
75 125
West 1Jcranany
-125
365
110
5
110
70
70 NegI.
Italy
310
305
55
NegI.
15
210
25 435
Others
165
100
5
30
15
25
25 20
Otkrr Free World
335
195
20
65
30
20
60 30
USSR
-10
40
....
....
....
35
5 30
- - - --- - - - - - - - - - - - - - -
I Preliminary.
2 US data are for fiscal years.
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Total
2,300
1,665
150
265
330
495
425
Argentina
355
235
:35
30
70
50
50
Bolivia
40
25
Negl,'
5
5
10
5
Brazil
470
331)
25
110
50
120
75
((ills
270
215
20
30
111
70
85
Colombia
155
105
15
If)
:15
40
5
Ecuador
O5
45
10
IO
III
IT,
Negl.
fern
415
310
20
(1.i
65
75
85
Venezuela
325
270
5
20
60
00
95
Others
205
130
20
35
25
25
25
Latin America
Africa
East Asia
Middle East
South Asia
Data are for 1072.
4.0 1.3
2.1 2.81
22.3 :3.4
10.1 11.91
2.9 3.5
Military Budgets of Latin America's
Five Largest Arms Purchasers, 1974
As a Percent of As a
Military Budget Central Government Percent
Billion US $ Budget of GNP
Argentina 0.8 12.8
Brazil 1.3 11.4
Chile 0.4 11.0
Peru 0.3 13.7
Venezuela 0.4 10.1
2.0
2.5
3.0
2.7
2.4
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