BUENOS AIRES, Oct. 1 (UPI) -- As compromises go, Argentina is buying used French Mirage jets from Spain rather than pour scarce cash into an ambitious but more desirable acquisition of new aircraft.
It's money that Argentina cannot spare, with mounting energy bills that eat up its export earnings, high inflation and slow growth.
The Latin American country's military doesn't have an immediate need to rearm itself, despite frequent rhetoric aimed at Britain over the Falkland Islands, but the government of President Cristina Fernandez de Kirchner is under pressure from the military to modernize the inventory somewhat.
The 16 Mirage F-1 jets Argentina will buy from Spain have served the Spanish air force for about 22 years. They'll replace Argentine air force's almost obsolete Mirage III fleet.
Fernandez was under mounting pressure from her military aides as neighbor Brazil contemplated buying new generation fighter planes. But the acquisition program in that country is on hold, as Brazilian President Dilma Rousseff fights to reverse slowing growth.
In Argentina the greater surprise is the deal itself. Last year, Argentina angered Spain after seizing control of Spanish major Repsol's majority stake in national oil company YPF. Madrid's various intercessions with Fernandez got to a point where King Juan Carlos was hauled in as an intermediary, to no avail.
Repsol's claims of $10 billion compensation for YPF seizure are still under discussion. Most analysts agree that Argentina will have neither the cash nor the inclination to compensate. But Spain, itself under huge economic strain in the eurozone's continuing crisis, is anxious not to burn bridges with Argentina, however troublesome its government may be.
The details of the Mirage deal were not discussed. Officials would only say the purchase was worth about $230 million. That spending is likely to appear as an expenditure in Argentina's budget next year. Exactly how the purchase will be funded and how the payment will be made remains unclear.
Argentina has hinted on and off that it wants to decommission its own Mirage III fleet. It's not clear how many are still flying. Argentina is known to have an assortment of more than 25 Mirage III jets, a few bought from Israel and Peru.
Analysts said the Mirage deal was of greater benefit to Spain, which would have had difficulty selling off its old jets. For Argentina, the purchase serves another purpose: of assuaging negative Spanish sentiment over Repsol YPF seizure.
Spanish diplomats have gone to great lengths to temper Repsol's occasional outbursts on its loss of YPF. Spain doesn't want to let go of Argentina, one of its former colonies in Latin America and a major springboard for peddling influence in Latin America.
Argentine officials said the Mirages will be refurbished before they are handed over by Spain. A number of avionics and weaponry features were added to the jets before they were formally decommissioned in June, but analysts say those changes too may need further revisions.
Features added to the Mirage-1 jets include airborne refueling capacity, laser-guided autonomous navigation and improved targeting gadgetry.
The Mirage family was one of the more successful fighter bombers produced by Dassault Aviation of France, which is struggling to market its new Rafale jet fighter. Brazil is among countries approached by Dassault as a Rafale potential buyer.
The new jet is well beyond Argentina's reach at present, both financially and in terms of air force human resources, while Fernandez grapples with severe economic problems and constraints on spending of foreign exchange earned through commodity exports.