MercoPress. South Atlantic News Agency

South America military expenditure up 2010, but insignificant in global terms

Argentina’s 6.6% increase was largely due to increases in salaries, says SIPRI

The region with the largest increase in military expenditure in 2010 was South America, with a 5.8% increase in real terms, reaching a total of 63.3 billion US dollars according to the latest report from the Stockholm International Peace Research Institute, SIPRI.

However the overall sum spent by South America compared to the world’s 1630 billion represents 3.9% and is less that 9% of the United States (698bn) and almost the same as the UK (60bn), France (60bn) or Russia (58bn).

Between 2001 and 2009 regional military spending in South America increased by an annual average of 3.7%, adds SIPRI arguing that the accelerating increase is surprising given the lack of real military threats to most states in the region, and the existence of more pressing social needs.

The SIPRI report states that world military expenditure estimated in 1630 billion US dollars in 2010 represents an increase of 1.3% in real terms. This represents the slowest annual rate of increase since the surge in global military expenditure that began after 2001. Between 2001 and 2009, the annual increase averaged 5.1% in real terms.

The increase in 2010 is almost entirely down to the United States, which accounted for 19.6 billion of the 20.6 billion real-terms increase.

Excluding the US, the total in the ‘rest of the world’ barely changed in 2010, increasing by a statistically insignificant 0.1%.

Regarding South America SIPRI says that increase in expenditure is simply ‘economic’ with the region enjoying strong economic growth in recent years. While in other regions, the effects of the global economic recession caused military spending to fall or at least rise more slowly in 2010 this was not the case in South America.

The economies of Latin America and the Caribbean in general were more resilient to the crisis, with a projected growth rate of 6% in 2010.

However, economics alone does not fully explain the rise of military expenditure in South America. Several other factors also lie behind the trend.

Geopolitics is likely to be behind the military expenditure increases of South America’s largest spender. Indeed, Brazil—whose 9.3% cent increase accounts for 2.4 billion of the 3 billion US dollars real-terms regional increase —is proactively seeking to project its power and influence beyond South America through the modernization of its military sector. With recent arms deals that include combat helicopters, submarines and new combat aircraft, Brazil is seeking to occupy a greater role in international affairs. Internal insecurity threatens are driving the trend in some countries.

Colombia, which has been involved in armed conflict since the 1960s, has increased its military spending by 72% cent since 2001, including a further 7.2% increase in 2010, to reach a total of 10.7 billion. Further increases are expected until 2014.

Peru has also increased its spending as the government seeks to increase military capabilities to fight the resurgent Shining Path insurgency. In 2010 Peru spent 2.15 billion USD, a 16% increase in real terms compared to 2009 which is the largest in South America.

In other countries, increases in military expenditure are largely explained by a rise in personal costs (including salaries, retirements and pensions). Indeed, a notable feature of military expenditure in Latin America is that it tends to be dominated by personnel expenditure, which typically comprises 50–70% of the budget.

Argentina, for example, increased its military expenditure by 6.6% cent in 2010, largely due to increases in salaries.

In light of the increasing trend in military spending across Latin America there were renewed calls in 2010 to improve transparency in military expenditure and arms acquisitions.

The Union of South American Nations (UNASUR) made commitments to strengthen existing transparency mechanisms—such as the Inter-American Convention on Transparency in Arms Acquisitions—and for member states to regularly report their military spending and arms acquisitions to the United Nations registers.

Some neighbouring countries in South America has also made bilateral agreements to harmonize the reporting of their military expenditure (i.e. Ecuador and Peru, and Peru and Chile) as a way to build confidence and create more transparency.

In Venezuela, military spending fell by 27.3% in 2010, against the regional trend, and is now slightly below its 2001 level in real terms. However, arms acquisitions are continuing, largely funded by loans from Venezuela’s chief arms supplier, Russia. The cost of these purchases therefore may not appear in published budget figures.

While in previous years, a wave of arms acquisitions had raised concerns about a potential arms race in South America, the cycle of acquisitions is likely to slow down in the coming years, but not necessarily end.

Chile, the largest arms importer in the region, is expected to lessen its rate of acquisitions following the abolition of a special law that gives 10% of the copper revenues to the armed forces specifically for arms purchases. The so-called ‘Secret Copper Law’ is to be replaced by a new system to fund arms purchases, which is likely to be administered by the Ministry of Finance.

The Brazilian Government has also announced that, in light of recent budgetary cuts, the decision to purchase combat aircraft—the ‘FX-2 program’—as well as frigates and offshore patrol vessels (OPVs) would be delayed until further notice.