Chilean President Sebastian Pinera, faced with swings in approval ratings after student turmoil last year, is said to be having second thoughts on major acquisitions for the military, in particular the air force.
Chile embarked on an ambitious defense modernization program, taking the cue from neighboring Brazil's emerging arms industry. Economic developments, including reduced growth forecasts, slowed the pace of the Brazilian defense program but Brazilians say the glitch is temporary.
In Chile, cutbacks have prompted the government to look again at some of the modernization projects begun soon after Pinera was elected in January 2010 and assumed presidency March 11 that year.
Less than a month before Pinera's inauguration a strong earthquake struck Chile, disrupting major state spending plans and diverting funds to reconstruction.
The financial burden of the quake aftermath continues to influence the government's spending plans. Last year Pinera resisted demands from rioting students for education reforms that required tens of millions of dollars of state funding.
The national defense modernization has strong supporters in the military but practical concerns once again have dominated government decision-making. Plans for advanced trainers for the Chilean air force are at risk of being shelved, Chilean defense bloggers and Defense News reported on their websites.
Instead, the reports said, the Chilean air force would like to concentrate on spending toward upgrades to its General Dynamics F-16 Fighting Falcon attack aircraft, bought secondhand from the Netherlands.
The sturdy F-16 is reputed to be one of the cheapest war jets to operate, one key reason for Chilean government decision-makers to continue making use of its existing inventory. Funds from planned upgrades to the military's trainer fleet are likely to be channeled into the F-16 upgrades program in collaboration with current manufacturer Lockheed Martin.
The Chilean air force operates an aged fleet of Spanish-built A/T 36 trainer jets. Until recently government procurement officials were looking at three prime candidates, Alenia Aermacchi's M346, the BAE Systems Hawk and Korean Aerospace T-50. That program is now shelved.
Around a dozen modern trainer aircraft were expected to be purchased to replace T-36s which are increasingly difficult to maintain and fail to provide the quality of training required to match the Lockheed Martin F-16 fleet.
The decision to shelve the purchase may have been taken to allow the Chilean air force to focus funding on the F-16, Defense News said.
"A delay might also allow the Chileans to see what the U.S. does in its jet training competition," the report said.
The three companies which had been lining up to bid for the Chilean trainer jet deal are also the front-runners in the U.S. Air Force TX competition, Defense News reported.
Lockheed Martin has been in talks with Chilean officials about the F-16 upgrade plans.
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