Wednesday, November 24, 2010

Internal Conflict Drives Latin American Arms Market

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."


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