Chile is catching up on a long-deferred defense modernization program that wasn't implemented earlier because of cash priorities elsewhere in the national budget. A recent spurt in copper prices enabled the government to look again at its defense acquisition planning. Chile is the world's largest copper producer and its budgetary decisions are often influenced by the state of the global copper market.
The Chilean peso ended stronger against the U.S dollar Tuesday in response to some recovery in international copper prices and the euro's gains against the dollar.
Chile, like other Latin American countries, is treading carefully on all spending as it weighs effects of the eurozone crisis on its economy.
The Foudre assault ship deal was reached a long while back, before the eurozone crisis broke and is part of Chile's national strategy to channel a significant part of copper earnings into defense restructuring and optimization.
Analysts said the amphibian ship was a cheaper option for President Sebastian Pinera to go for as a popular piece of naval hardware that would be more affordable than a larger ship that could require ancillary hardware and equipment, including helicopters and other vessels.
Pinera and aides have been hinting at plans for extensive defense modernization but have held back amid unexpected demands for government cash -- from a huge allocation toward rebuilding after the Feb. 27, 2010, 8.8-magnitude earthquake to relief and repairs after volcanic eruptions and other weather vagaries, plus expensive education and economic reforms.
Pinera is also pumping money into major new energy projects, including a controversial hydroelectric dam complex in the southern region that has drawn fire from environmentalist groups, opposition critics and the media. Critics have also accused the president of a conflict of interest because of his business links, a charge that Pinera has repeatedly dismissed.
Critics also question Chile's military procurement program but independent analysts agree that Chile does need extensive modernization of its military, neglected during the transition from dictatorship to civilian rule.
The 1,300-ton amphibious assault ship will replace a ship that was so overused and old that it had to be decommissioned. The multipurpose Valdivia was a naval workhorse that was extensively used for the transport of troops and military equipment in various peacetime tasks.
Defense Ministry officials said the French ship will likely be equipped to handle emergency evacuations of up to 1,600 people. The Foudre class landing platform dock offers a flexible and modular platform that will fulfill the Chilean navy's needs in coastal operations.
Navy Commander Adm. Edmundo Gonzalez-Robles said earlier the Foudre's purchase was more than a new acquisition.
"What we are doing is recovering the capacity we lost when Valdivia after 15 years in service was decommissioned," he said. Valdivia was taken out of service in January this year.
Gonzalez-Robles said the new ship will give Chilean navy capacity that it doesn't have. Having the ship in the navy means "we can transport in a single trip the whole population of Chaiten or the island of Juan Fernandez, if a natural disaster were to happen and which we have gone through recently," Gonzalez-Robles said.
Chaiten, in the Los Lagos region north of the mouth of the Yelcho River, was evacuated in May 2008 when the Chaiten volcano erupted for the first time in more than 9,000 years. In subsequent flooding, the river excavated a new course through the town, destroying a major part of it by July 2008.
Juan Fernandez in the South Pacific was hit by a tsunami caused by the earthquake last year, causing at least eight deaths.
Gonzalez-Robles said the new vessel would be "ideal for support of remote or isolated zones as well as an effective transport for marines and army personnel."
Last year Chile bought a 42,000-ton tanker from the U.S. Navy. AO-52 Almirante Montt replaced AO-53 Araucano, which was decommissioned after 40 years of service.
Officials said Chile would likely hold back on further acquisitions until the eurozone's direction was clearer. Chilean analysts fear the eurozone's troubles will impact on copper prices and leave Chile with less export earnings than originally envisaged for 2012.