Brazil aims to expand arms industry market in S. America

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RIO DE JANEIRO, Feb. 14 (UPI) -- Brazil is taking measures to build and expand a regional market for its resurgent defense manufacturing industry, extending to neighbors Argentina and Uruguay the promise of closer collaboration in the military and security sectors.

Brazilian Defense Minister Nelson Jobim, on a tour of neighboring member countries of the Mercosur trade pact, held out the possibility of regional industries supplying components for military hardware and software manufactured principally in Brazil.

Brazil has been investing in reviving the country's defense manufacturing, which saw its heyday in the 1980s and, because of market concentration at that time in the Middle East, faced collapse when Iraq stopped imports at the end its war with Iran in 1988.

The rejuvenated Brazilian arms industry is aiming to diversify the sources of technologies needed for its modernization while aiming to expand the range of markets it can access for global revenue growth.

Unlike the 1980s Brazilian defense industry today accounts for short- to medium-range aircraft that are confidently competing with major players in North America and Europe, weapons for infantry and mechanized units as well as naval craft and maritime defense equipment.

Brazil also aims to build submarines and has plans to collaborate with France on building a nuclear-powered submersible.

This week Brazil held out the prospect of a "strategic" collaboration with Argentina and Uruguay. Argentina has its own ambitions of developing its military industries but is short of cash and lags behind Brazil in industrial infrastructure and expertise.

Brazil is particularly interested in developing collaboration in naval craft construction at Argentine shipyards.

In Uruguay, Brazil is looking to secure new deals for the supply of military equipment built in Brazil and offer defense packages on attractive financial terms. Officials from both sides have already looked into a plan for building a subsidiary in Uruguay that will make components for Brazilian aircraft industry.

Meanwhile, a final decision on Brazilian plans for buying strategic fighters for the defense of its offshore hydrocarbon reserves remains elusive as President Dilma Rousseff weighs various defense and political options.

Last week Brazilian media speculated that Brazilian acceptance of a French deal for the supply of Dassault Aviation's Rafale jets was far from certain while key other players lobbied for rival bids from the Boeing Co.

Speculation over the future direction of the contract became rife after U.S. Treasury Secretary Timothy Geithner and former Republican presidential candidate Sen. John McCain, R-Ariz., visited Brazil for talks with Rousseff.

Brazilian officials said they would continue to examine competing bids from Boeing, Dassault and Sweden's Saab till they could be satisfied that Brazil's expectations on high levels of technology transfer and unrestricted supplies in the future could be met.