Headlines, Latin America & the Caribbean

PERU-CHILE: No End in Sight to Arms Race

Ángel Páez

LIMA, Nov 14 2005 (IPS) - Peru has once again become an attractive market for arms manufacturers and merchants, since President Alejandro Toledo modified his policy to reduce military spending in December 2004, with the creation of the National Defence Fund to purchase, repair and upgrade the country’s military equipment.

According to the Peruvian government, Ukrainian Deputy Foreign Minister Oleg Shamshur met Nov. 8 with Defence Minister Marciano Rengifo to discuss “points of view on questions of mutual interest.”

Behind the protocol and the exchange of gifts, the Ukrainian official set forth a proposal from his government that was not made public: to build an airplane service centre to repair Antonov cargo planes – which would service all of Latin America – as well as a munitions factory, in the Peruvian capital.

The proposal coincided with a rise in tension between Peru and Chile over the two countries’ sea border.

Peru’s new National Defence Fund became operative this year with an initial allotment of 40 million dollars. It will be funded by royalties that the state receives from the companies that pump natural gas in Camisea, in Peru’s southeastern Amazon jungle region.

The armed forces will receive a total of 2.55 billion dollars in gas royalties over the next 20 years – 127.5 million a year, 354,000 a day – to go towards arms purchases.

When he took office in July 2001, Toledo announced his decision to stop buying weapons, in order to dedicate more funds to poverty alleviation programmes in a country where more than half of the population of nearly 28 million lives in poverty.

That decision came after the regime of Toledo’s predecessor, Alberto Fujimori (1990-2000), spent around four billion dollars on weapons, partially financed with 1.1 billion dollars brought in from the privatisation of public enterprises.

The country’s weapons purchases significantly increased as a result of a border dispute with Ecuador that flared up into fighting in 1995. Although a peace agreement was signed by Lima and Quito in 1998, Fujimori (in prison in Chile since Nov. 7) continued to channel funds into defence – a sector that served as the main mechanism for corruption in the Fujimori administration, according to legal investigations.

Fujimori’s security chief, Vladimiro Montesinos, received huge bribes from arms dealers who benefited from the military purchases. The president himself gave the orders for which companies to buy from, and they in turn inflated the prices.

Judicial authorities believe the 140 million dollars that Montesinos stashed away in secret bank accounts in Switzerland came from bribes paid by firms that sold Peru MiG-29 and Sukhoi-25 bombers, Mi-17 and Mi-6T helicopters, telephone tapping equipment, electronic war systems and other military equipment.

Toledo’s decision to cease making arms purchases was based on the fact that the long-standing border conflict with Ecuador was finally put to rest. But shortly afterwards, he recognised that a solution to Peru’s sea border dispute with Chile, which has rankled since that country defeated Peru and Bolivia in the 1879-1883 War of the Pacific, was still pending.

On Nov. 3, the Peruvian Congress unanimously approved a law that redrew the sea border between the two countries, thus extending Peruvian jurisdiction southwards over a triangular area encompassing almost 15,000 square miles of rich fishing waters.

The Chilean government objected to the Peruvian law and said Chile would continue to exercise full sovereignty over the maritime area in dispute.

Toledo’s defence policy shift benefits the armed forces, which have been hit hard by the implication of high-ranking officers in the corruption that was rampant during the Fujimori years. The latest incident with Chile also gave the military renewed protagonism.

Toledo had initially appointed civilians to run the Defence Ministry, but they were later replaced by retired generals. In late August, the current minister, Rengifo, caused a diplomatic row when he threw the Chilean flag to the ground in Congress. The Peruvian government immediately apologised to Chile.

The creation of the National Defence Fund was seen as a victory by sectors in the military that were demanding a fixed budget for upgrading their weapons systems, arguing that the Chilean armed forces have had a law since 1958 that assigns them 10 percent of the country’s copper export earnings, and that they have constantly upgraded their equipment since the 1980s.

In Peru, by contrast, improvisation has been the rule, they say. As a result of the conflict with Ecuador, Lima acquired Russian-made weapons through black market arms dealers. The MiG-29 and Sukhoi-25 bombers were purchased from Belarus, despite warnings from Russian manufacturers that they would provide no guarantees for the aircraft.

Fujimori’s arms purchases in the 1990s encouraged Chile to imitate him, and for years the two countries have worked to keep up with each other in the arms race.

After Peru acquired MiG-29s, Chile bought nearly a dozen F-16 supersonic fighters, and is currently negotiating the purchase of 28 additional F-16s from the Netherlands.

During the military dictatorship of General Juan Velasco Alvarado (1968-1975), Peru purchased 290 T-55 tanks from the Soviet Union with the supposed goal of recuperating the regions of Arica and Tarapacá, which it had lost to Chile in the War of the Pacific.

On the assumption that Fujimori had acquired modern T-72s, Chile justified the purchase of 30 AMX and 290 Leopard tanks.

After Toledo announced the incorporation of four Lupo frigates, Chile closed a deal for the purchase of three Type 23 frigates from the British Royal Navy, for 250 million dollars, and four from the Netherlands for 350 million.

Since Peru stated in 2003 that the maritime border needed to be redrawn, both countries have further increased their defence spending.

Last year, Peru signed an agreement with Russia to refurbish, service and upgrade its military equipment, 60 percent of which is Russian-made. The cost of the deal ran to an estimated 250 million dollars.

Chile’s defence minister at the time, Michelle Bachelet – who is slated to win the presidency in the upcoming elections as the governing centre-left coalition’s candidate – then travelled to Moscow and signed a similar agreement.

Toledo responded by creating the National Defence Fund, which whetted the appetites of the world’s arms merchants. Companies from Israel, China, Ukraine, Belarus and Poland have been visiting government offices to market their wares.

Yugo Import from Serbia and Montenegro invited 20 senior army, air force and navy officers from Peru to visit the company’s installations in Belgrade.

The Israeli aeronautics industry underbid Russia for the repair of Peru’s Russian-made Mi-25 helicopters, while Poland is interested in refurbishing and modernising the country’s MiG-29s. Ukraine does not only want to repair, but to sell new Antonov cargo planes. In July, China took then defence minister Roberto Chiabra on a tour of its weapons factories.

As long as the controversy over the sea border with Chile remains unresolved, defence spending will continue to escalate, reducing the funds available for the fight against poverty.