For many years, military spending in South America was a footnote in forecasts of the global arms trade. While that was once a healthy sign of a continent largely at peace among member states, the stakes have changed. South America still does not compare with the giants of the global arms trade, but military spending is growing rapidly.
© Colombian air force
Colombia has set about upgrading its Kfir fighters
The Stockholm International Peace Research Institute (SIPRI), the world's independent arms trade watchdog, felt compelled to issue a report earlier this year on Latin American spending. As budgets have "risen considerably", SIPRI's analysts sought to focus attention on the continent's woeful record of disclosure on military budget accounts.
The institute may have some grounds for raising the alarm. South American countries are poised for a new round of major arms purchases. From Brazil to Chile to Venezuela, air forces are priming to re-arm their front-line fighter fleets. Everywhere, countries are prioritising the growth of local aerospace companies, leveraging the biggest weapons deals to transfer key skills and technologies to local industry. The continent's traditional Western suppliers are not the only ones to notice. Russian and Chinese manufacturers have poured into the region, striking deals for fighters, helicopters, trainers, transports and unmanned air vehicles (UAVs).
A seemingly never-ending fighter modernisation process in Chile is gearing up for a fourth competition in less than 20 years. The Chilean Air Force (FACh) has 16 Northrop F-5 Tiger IIs that are due to be retired after 2015. Contractors are already preparing for the biggest procurement prize in South America, after Brazil's F-X2 acquisition programme for at least 36 fighters.
Lockheed Martin was Chile's preferred supplier in the previous three rounds. The FACh selected the F-16 Block 50 in 2000 for a 10-aircraft order. That was followed in 2004 by a first batch of 18 second-hand F-16A/B mid-life update Block 20s from the Netherlands, and in 2008 by a second batch of another 18 F-16A/Bs. In addition, the FACh ordered 12 Embraer EMB-314 Super Tucanos.
Lockheed has been eager to campaign for the F-5 replacement order for at least five years. In 2007, a Lockheed executive even touted the F-35 as a possible option for the FACh. Three years later, a US Air Force F-22 made a debut appearance at the FIDAE air show. The F-35 programme delays and cost increases may lead Chile to look elsewhere, but Lockheed may still offer new or used F-16s. On the other hand, Chile's political and military leadership may prefer to diversify its sources of combat aircraft. Prior to the F-16 selection, the FACh inventory included a mix of US-made F-5s and French-made Mirage 50s.
FACh officials have reportedly visited Eurofighter manufacturing sites in Spain. A batch of new or used EF-2000s ordered by Chile would introduce the type in Latin America. Chile has been among the most active military spenders in recent years as a 10% tax on surging copper revenues has kept procurement active. In addition to the new fighters, Chile will introduce the most advanced UAV in South America. In June, Chile was disclosed as the buyer of an Elbit Systems Hermes 900.
Sustained economic growth has yielded some benefits to Argentina's air force, but perhaps not in the way service leaders had envisioned. Despite sustained growth as Latin America's third-largest economy, Argentina still operates one of the most ancient fleets of combat aircraft.
Its "youngest" fighters, measured in terms of Argentine service, are ex-US Navy A-4s, delivered in the late 1990s with upgraded radars and avionics by the former Lockheed Martin Aircraft Argentina (LMAASA). The air force fleet also includes 13 Dassault Mirage IIIs, seven Mirage 5s and 13 Israel Aerospace Industries Daggers. The navy, meanwhile, operates 11 Dassault-Breguet Super Etendards.
Although Argentina's defence budget has doubled since 2007, there are still no active replacement programmes. The inaction may be partly explained by market analysis from Forecast International, which estimates personnel salaries consumed 70% of the $4 billion defence budget in 2011. The $4 billion budget, while a 100% improvement on 2007, still represents only about 0.6% of Argentina's GDP.
However, there are encouraging signs for the resurgence of Argentina's air force. The rise in military spending has allowed a once highly skilled aerospace industry to rebound from decades of neglect. In 2009, the nation's Kirchner administration reclaimed LMAASA from Lockheed's management.
The Argentine-owned FAdeA reopened its factory in Cordoba on 17 December, and the company has hummed with activity ever since. Although it has yet to work on Argentina's front-line fighters, it has reset its skills set by modernising the country's proudest aviation achievements - the IA-58 Pucara light attack aircraft and the IA-63 advanced jet trainer.
On 8 July 2011, FAdeA delivered the first upgraded IA-58 to the air force. The upgrades start with maintenance improvements, with the eventual replacement of the avionics and navigation systems. Finally, FAdeA will replace the ageing Turbomeca Astazou engines with Pratt & Whitney PT6A-62s, allowing the seminal counter-insurgency aircraft to remain in service until 2045.
Meanwhile, the air force has also funded FAdeA to manufacture 40 IA-63s designed to the Series II standard, which includes the 4,250lb (1,900kg) Honeywell TF731-40-N2 turbofan. The first flight of a re-engined IA-63 on 8 June 2011 spurred FAdeA's marketing division to poetically describe the "sublime moment that justifies the hours and hours of dedication, effort, ingenuity and creativity".
FAdeA is already pursuing larger ambitions, while the country's aeronautic pride has been rekindled. The air force's aeronautical university has developed an all-new cruise missile - the FAS-850 Dardo 2C. Another local company has joined forces with Israel's Innocon to develop the indigenously built Yarara, a 30kg-class unmanned air vehicle.
FAdeA wants to design a new military trainer to replace the air force's retired Beechcraft T-34 Mentors. A prototype of the IA-73 is notionally scheduled to achieve first flight in 2013. If it succeeds, the IA-73 will be the first Argentine-built aircraft to enter service since the IA-63 in 1988.
Other opportunities are being pursued. In November, FAdeA hosted a delegation from the China National Aero-Technology Import & Export Corporation (CATIC) to discuss the possibility of license-building the Changhe Z-11 helicopter. The Argentine army evaluated the Harbin Z-9 in 2008, and selected the aircraft.
In January 2011, Embraer had the misfortune to launch a defence and security business around the same time Brazil made a 26% cut in military procurement. Luiz Carlos Aguiar, president of Embraer's defence business, shrugs when recalling the episode. "As a matter of fact, by the end of the year we had a very good recovery," he says. "They didn't cut one single programme from their plan."
The momentary pause in Brazilian defence spending has passed. With Brazil hosting the football World Cup in 2014 and the Olympic Games two years later, few countries in Latin America have more incentive to invest in Latin America during the next two years.
Aguiar notes that the 2012 defence budget largely recovers any reductions in the procurement accounts from last year. In fact, the procurement budget has increased in 2012 by 18% to R8 billion ($4.5 billion).
The largest allocation - $500 million - is for Brazil's joint helicopter programme, which is acquiring 50 Eurocopter EC-725s. The budget also invests a further $302 million in the Embraer KC-390 tanker-transport, which is scheduled to fly in 2014 with deliveries two years later. However, the FX-2 fighter contract - Brazil's 16-year-old competition to replace a fleet of Dassault Mirage IIIs - is not in the 2012 budget. The competition has dragged on so long the Mirage IIIs have been replaced by Mirage 2000s, which also need to be retired.
© US Air Force
Brazil's contest to replace its Dassault Mirage IIIs is now 16 years old
But the lack of a 2012 line item for FX-2 is no cause for concern. Brazil's air force is expected to continue negotiating with the winning bidder for up to a year after contract selection before making the award.
Brazil's president Dilma Rousseff is reportedly set to make a decision in the first half of this year. The Boeing F/A-18E/F Super Hornet, Dassault Rafale and the Saab Gripen remain in the bidding, almost four years after the air force selected them as finalists. For its part, Boeing confirms the pricing it originally submitted in 2009 remains valid.
For Embraer, the decision is of no great consequence. In contrast with the aborted F-XBR competition, Embraer has forged no formal links with a particular bidder as it once did with Dassault. Meanwhile, the company can continue reaping the benefits of the continued delays.
In addition to the arrival of the Mirage 2000s in 2005, the delays have forced Brazil's air force to fund a new round of avionics and structural upgrades for the existing fleet. Embraer has received deals to upgrade 41 A-1 Alenia/Embraer AMX fighters, 53 Northrop F-5s, and 12 McDonnell Douglas A-4s. The upgrades are part of an overall $397 million line item in the 2012 budget to pay for the modernisation of the legacy fleet. "We have received all of our money related to all of our programmes," Aguiar says.
The Venezuelan military's acquisition arm has never been busier - or more creative. Banned by the USA from receiving most Western sources of supply since 2006, Venezuela has looked to Russia, China and Iran for arms during the past five years. US sanctions have failed to slow Venezuela's modernisation strategy, and in some ways have forced Caracas to aim even higher. Take the example of Venezuela's campaign to replace its ageing F-16As. The USA first blocked Brazil and Italy from exporting the AMX fighter, then stopped Israel from bidding to upgrade the F-16As with new avionics and weapons.
In response, Venezuela turned to Russia in 2006 to supply 24 Sukhoi Su-30s, a far more potent threat than upgraded F-16As. China also received orders for two batches totalling 24 to 36 Hongdu K-8Ws - more challenging to slip past the US export ban as the K-8 is powered by the Honeywell TFE731-2A turbofan engine. Hongdu has reportedly re-engined the K-8s with the Ukrainian Ivchenko Al-25TLK, and deliveries are already under way.
These procurements only seem to be the beginning for Venezuela. According to the Civil Association of Citizen Control (CACC), a Venezuela-based security watchdog, during the past two years Venezuela has announced a long list of future acquisitions.
Since April 2010, President Hugo Chavez has announced the acquisitions of two Beriev Be-200s for firefighting missions, 24 Su-35 fighters, up to 20 Antonov An-74 maritime patrol aircraft and 10 to 12 Shaanxi Y-8 transports, the association says. Venezuela has also been linked to the acquisition of the Chengdu J-10 or the less-capable JF-17, the CACC adds.
It is not always clear how real Venezuela's acquisition announcements are, but its rapid re-arming after 2006 lends some credibility. If all come to fruition, Venezuela could boast the most powerful air force in South America.
While it is importing weapons from Russia and China, Venezuela appears to be asking Iran for technology transfer, particularly in the crucial area of UAVs. Iran is widely reported to have exported 12 Ghods Mohajer UAVs to Venezuela, a tier-two aircraft by Western standards. Apparently some transfer of engineering skills accompany the sale. In November, Venezuela's state-owned armoury CAVIM unveiled a UAV called the ANT-1X.
Despite being one of the most prolific military spenders in South America, the Colombian air force boasts a modest combat fleet. Rather than replace ageing Kfir fighters, Colombia upgraded them to carry Israeli Python and Derby missiles, as well as Griffin III laser guided bombs. So it would come as no surprise if the Colombian air force decides used aircraft will suit its needs for the next big requirement: replacing eight Cessna A-37 Dragonflys.
Colombia's latest strategic plan seeks to acquire a jet-powered light attack fighter. There is no shortage of options available, including the Korea Aerospace Industries/Lockheed Martin T-50, Italy's Alenia Aermacchi M-346 and the UK's BAE Systems Hawk. However, expect Colombia to seek used aircraft from sources that include the Czech Republic's Aero Vodochody L159 and Italy and Brazil's AMX.
Meanwhile, Colombia's military is investing heavily to improve its aerospace industry. The military has ordered 25 Lancair Legacies, requiring local assembly. As of 8 March, state-owned CAMAN has assembled eight of the re-designated T-90 basic trainers.
In the meantime, Embraer has started to work with the Corporation de la Industria Aeronautica Colombiana (CIAC) to help the air force extend the life of 14 EMB-312 Tucanos by about 15 years. Embraer is also still seeking to convert a letter of intent with Colombia into an order for two KC-390 tanker transports, says Aguiar.
Colombia's goal is to allow CIAC to gain experience on the Tucano contract, then take on a bigger role in the KC-390 work.
"Depending on their performance they are going to be able to transfer some very simple aerospace components for the KC-390," Aguiar says. "They are trying to develop their industry step by step.
Peru has always been content to acquire its military aircraft from abroad, but there are recent signs that it, too, wants to develop more industrial capability.
The most significant step in this process came in late 2011, when Minister of Defence Daniel Mora confirmed the acquisition of a surprise new trainer and light attack fighter to replace its fleet of Cessna A-37 Dragonflys - the Korea Aerospace Industries KT-1 Woong-Bee.
© Colombian air force
The Super Tucano has lost out to the KT-1 in Peru
It had once seemed inevitable that Peru would eventually buy the Embraer EMB-314 Super Tucano - to the point that Brazil's ministry of defence announced in February 2011 that Peru was in talks to buy 10 EMB-314s in a deal valued at $150 million.
However, something changed in Peru's decision-making process, and now the country's air force expects to take delivery of 24 KT-1s from South Korea.
Peru's decision clearly had nothing to do with comparative combat performance. The KT-1 is widely considered a robust trainer, but it is powered by an engine slightly more than half the size of the Super Tucano's powerplant.
The key to the deal may well have been cost, as the KT-1 is valued at less than half the price of the Super Tucano.
South Korea also agreed to allow Peru's local industry to participate in the acquisition. Peru's SEMAN repair station is reportedly assembling all 24 KT-1s for the air force, and is also producing between 500 and 600 parts of the aircraft.
Peru's air force has quietly, but steadily, re-equipped or modernised its combat aircraft fleet in recent years. Government policy has focused on eradicating coca farms, which has stirred the opposition of local farmers and created a minor security threat. In addition to the KT-1s, Peru also has a contract with Canada's Viking Air to deliver 12 DHC-6 Twin Otters for remote transport operations.
Helicopter modernisation has also been a recent priority. Russian Helicopters has begun deliveries of Mi-35P gunships and Mi-171Sh transports to Peru.
Meanwhile, Peru has also moved to prevent its ageing fighter fleet from drifting into decay. Last year, RSK completed deliveries of Peru's 12 MiG-29SMPs upgraded with new avionics. The MiG upgrades followed a $140 million project, which was launched at the 2009 Paris air show, to "recover" the air force's 12 Mirage 2000s, with Dassault, Thales and Snecma contracted to restore the airframes, avionics and engines.
Among Latin American air forces, Ecuador's has probably progressed the most since 2008. In March of that year, the sorry state of the Ecuadorian air force (FAE) was exposed when Colombia's air force attacked a suspected rebel hideout about 3km south of its border. Ecuador's air force was unable to even dispatch helicopters to the scene of the bombardment, much less defend the sovereignty of its airspace against what the government considered an illegal attack.
Three years later, the FAE has new fleets of HAL Dhruv helicopters from India; IAI Heron and Searcher UAVs from Israel; EMB-314s from Brazil; and, most recently, second-hand HAL Cheetah fighters from South Africa. It has also installed air surveillance radars along its border. The acquisitions follow a $680 million, three-year investment in the armed forces.
"We understood there is no security without development, but also no development without security," said President Rafael Correa, speaking on 14 February at the delivery ceremony of the Cheetah fleet.
There have been minor incidents along the way. One Dhruv helicopter crashed in October 2009 during a public ceremony. The pilot, who was killed, was blamed. Last August, an ejection seat malfunctioned in the Cheetah, which Correa attributed to an assembly error.
Ecuador's military modernisation is still ongoing. The country is reportedly in discussions with China to buy the Xian MA-600 transport. The US military has notified Congress that Ecuador's navy has requested a possible sale of second-hand Kaman SH-2 Seasprite helicopters.