LATIN AMERICA: Foreign Defense Contractors Flock to Brazil

A New Gold Rush

As it raises its defense spending as part of a strategy to secure its borders and offshore oil deposits, Brazil has become a big draw for foreign defense contractors like BAE Systems, Eurocopter, Boeing, Saab and Dassault, according to the Financial Times.

Saab’s JAS-39 Grippen is one of the fighter aircraft Brazil is considering buying to modernize its airfleet. (U.S. Air Force photo by Lawrence Crespo)

Brazil is building a fleet of five submarines — one of them nuclear-powered — with French contractor DCNS. And aircraft from France (Dassault’s Rafale), the United States (Boeing’s F/A-18 Super Hornet) and Sweden (Saab’s JAS-39 Gripen) are all vying for Brazil’s much delayed selection of a contractor to build a new fleet of more than 30 multi-role jet fighters.

Brazil is Latin America’s largest country and the sixth-largest economy in the world.

The Stockholm International Peace Research Institute ranks Brazil 10th in military spending in 2011 — up from 11th in 2010. Brazil’s military budget was $35.4 billion, SIPRI calculated, or 1.5 percent of Brazil’s gross domestic product. it’s defense spending has risen 19 percent since 2002, even though it dropped 8.2 percent from 2010 to 2011.

Overall, Latin America’s defense spending dropped 3.3 percent in 2011. It was up 5.1 percent in 2010. The biggest increase was Mexico’s: up 5.7 percent in 2011 and up by 52 percent since 2002 — largely due to increased military involvement in the country’s war with drug cartels, SIPRI said in an April 2012 report.

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Helicopter Deal

CIA World Factbook

Brazilian aircraft manufacturer Embraer S.A. has signed an agreement with Anglo-Italian helicopter manufacturer AgustaWestland establishing a joint venture to explore producing helicopters in Brazil, both companies announced recently.

Preliminary studies by Embraer and AgustaWestland indicate strong market potential for twin engine, medium lift helicopters — especially to meet the needs of the of the offshore oil and gas market. Other key market sectors, such as the military, “show promising potential as well,” the companies said.