Press Release
Contact: Tom Baranauskas, Latin America Defense
Analyst
Phone: (203) 426-0800
Fax: (203) 426-4262
Web site: www.forecast1.com
E-mail:
tom.baranauskas@forecast1.com
Forecast International, Inc.
22 Commerce Rd. Newtown, CT 06470 USA
FOR IMMEDIATE RELEASE
Instability on the Rise in Latin America, but Defense
Spending Remains Largely Flat
NEWTOWN, Conn., November 3, 2003 - In its latest update of the "Latin America Defense Market
Analysis" Forecast International estimates that total military spending for the
region will reach about $24.5 billion in 2003 and modestly increase to just
over $27 billion annually by 2007. A small increase is expected in regional
military spending over the period through 2008 to about $27.3 billion, but much
depends on economies recovering and sustaining growth.
Still, military opportunities remain, and the Latin American
defense market has become noted for the fierce competition among contenders for
even minor requirements. Brazil's F-X fighter competition, for example, or
Chile's new frigate requirement reveal just how intense the competition can
be. Contenders can improve their chances by setting up financing packages,
with the region's militaries increasingly turning to borrowing to fund their
larger requirements.
Latin America is seeing yet another round of instability
that has been developing for some time, and the prospects for major future
instability are quite likely. However, the implications for defense spending
remain somewhat nebulous.
For some time, the spillover of Colombia's internal security
problems has created major headaches for its neighbors, forcing most to
substantially increase security spending. However, even these increases are
not necessarily what they seem, especially given the fact that there appears to
be a substantial amount of "robbing Peter to pay Paul" where other
security/defense accounts suffer to fund border security improvements. In
Colombia itself the government is making some gains in combating its rebels,
but at a high financial cost that may not be sustainable at its present level.
Meanwhile, violent crime within the region continues to
swell, helped along by the easy availability of automatic weapons. Indeed,
criminal gangs now are often better equipped than local police. To no one's
surprise, the police are increasingly hard put to cope, prompting governments
to send in the military, which are often untrained for, or unwilling to deal
with, the problem.
The region's most dangerous security development is the
growing militancy of long-oppressed indigenous people, particularly in Ecuador
and Bolivia. This move toward militancy began in Ecuador a decade ago but it
is in Bolivia that it has gestated into a real force. When Bolivia's unpopular
president Gonzalo Sanchez de Lozada sent the troops in yet again to put down
widespread unrest, 65 people died in the subsequent crackdown. Yet, the
crackdown failed to suppress the protests and de Lozada was forced to resign in
October 2003.
The Bolivian chain of events has emboldened the indigenous
people across the region, and considering their high degree of frustration,
should provide a considerable source of worry for any Latin American leader.
The indigenous people's long-standing frustration is shared by most of the
region's poor and disenfranchised, who feel that the free market reforms of the
past decade have benefited them very little. While guerrilla movements in past
decades have fed off the poor, their leadership often came from the upper
classes. Led by a new generation of dynamic leaders, this developing
grassroots movement of the disenfranchised sectors of Latin America takes full
advantage of the communications revolution and has the potential for fast-paced
chains of events that governments will be hard put to control.
The region's militaries face a wide range of potential
threats, along with the need to maintain a conventional military capability,
but funding remains a problem. Of the $24.4 billion in military spending
forecast for the region for 2004, a full 80 percent is likely earmarked for
salaries, social security and pensions, leaving less than $5 billion to procure
equipment, fuel or even food. Furthermore, promised military budgets often
are not completely delivered, leading to operational problems and procurement
dislocations.
Forecast International, is a leading provider of Market
Intelligence and Analyses in the areas of aerospace, defense, power systems and
military electronics. Based in Newtown, CT, USA, Forecast International
specializes in long-range industry forecasts and innovative marketing
presentations, including regular 10-year forecasts. To arrange an interview
with Forecast International's analysts, please contact Monty Nebinger
(203-426-0800, monty.nebinger@forecast1.com).