Editor's Foreword

In March 2009, the 12 defence ministers of the
South American Defence Council (SADC) – created to
promote dialogue and coordination on regional security
and defence issues – met for the first time. At an
inaugural two-day meeting in Santiago, participants
discussed proposals on how to increase transparency
in military spending and equipment acquisitions. For
many years, the lack of transparency in military expenditure
has fostered mistrust in the region. Different
countries include differing factors in their budgets
and several derive additional military funding from
a wide variety of opaque sources, including wealth
taxes and the profits from commodity exports. It is
thought that most countries, with the exception of
Venezuela and Peru, indicated some willingness
to increase transparency, although whether this
will stretch as far as an Argentine proposal that all
members adopt a standard defence-budget methodology
remains to be seen.
As the region’s biggest economy, Brazil has not
been immune to the global economic downturn:
growth of 5.1% in 2008 was followed by a 1.3%
contraction in economic output in 2009. However, in
their 2009 Article IV Consultation, the IMF praised
the Brazilian government for its ‘robust policy framework’,
suggested that the country was in a ‘favourable
position’ to successfully weather the downturn,
and forecast a return to positive growth of 2.5% in
2010. As in recent years, Venezuela’s ongoing militarymodernisation
programme provided the background
for another increase in Brazil’s military budget.
Between 2000 and 2004 military spending in Brazil
was static and had fallen to 1.4% of GDP; since 2005,
Latin America and the Caribbean
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however, the budget has increased by around 10% a
year, and in 2009 it jumped to R51.3bn (US$29.7bn)
or 1.7% of GDP. The government has rejected claims
that its rising military budget is a reaction to developments
elsewhere on the continent, saying instead –
and not without reason – that the extra money is due
to the urgent need to upgrade and replace parts of its
ageing military inventory after years of underinvestment.
Replacing the armed forces’ old equipment,
however, will continue to be a challenge, given that
in 2009 only around US$2.3bn of the total budget was
allocated to procurement, whereas US$22.4bn (75% of
the budget) was spent on personnel-related issues.
Of the three services, the army is saddled with
a particularly old, indeed in many cases obsolete,
inventory. Acknowledging the dire state of much
of the army’s military equipment, the new national
defence strategy, approved in December 2008,
earmarked a sum of around US$70bn to upgrade the
army’s capabilities. The plan focused on two main
areas: improving security in the Amazon region and
the acquisition of new hardware. The army will be
reorganised and modernised into units including a
light infantry brigade based in Rio de Janeiro, a jungle
infantry brigade based in Manaus and an airborne
brigade based in Anapolis, while end strength will be
increased by 59,000, with 22,000 troops based in the
Amazon region. The re-equipment programme will
focus on improving deterrence, flexibility, modularity
and interoperability.
A second equipment programme, known as Cobra,
will focus on procurement of the IVECO VBTP MR
family of armoured vehicles (comprising 17 vari-
Table 11 Latin America and the Caribbean Regional Defence Expenditure as % of GDP
% of GDP
2.0
1.5
1.0
0.5
0.0
1.42 1.38 1.46 1.37 1.31 1.29 1.33 1.25 1.29 1.35
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Year
Latin America
and Caribbean