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Peru arms buying shows Chinese inroads into S. America

Dec. 11, 2009 at 6:29 PM   |   Comments

LIMA, Dec. 11 (UPI) -- Peruvian arms buying in China for undisclosed amounts but on favorable credit terms has confirmed analysts' assessment that China has joined a lineup of arms manufacturers seeking new markets in Latin America.

China launched a major fightback in Latin America last year as its markets elsewhere shrank in response to the recession. Amid projection of a steep rise in China's own energy consumption, China also went shopping for hydrocarbon companies and sealed contracts that would guarantee its oil and gas supplies.

China entered into similar arrangements elsewhere, including Africa, the Middle East and Central Asia and the Caucasus.

France and Russia launched energetic marketing campaigns in the region this year and have already secured contracts worth tens of billions of dollars. Russia's arms sales to Venezuela on easy payment terms are known to run more than $20 billion, though neither side has revealed precise figures.

What surprised analysts the most, however, was a Peruvian deal for the purchase of Chinese tanks and fighter aircraft. Until a few weeks ago, Peru was spearheading a campaign for limitation of arms purchases in Latin America, arguing none of the countries was at war and the resources would be better spent on reducing poverty.

Peru has been cited for a substantial economic recovery and growth, projections that may have influenced the government's decision to opt for weapons acquisition at the best available terms.

Alicia Barcena, executive secretary of the Economic Commission for Latin America and the Caribbean, said the region will grow 4.1 percent in 2010 with positive growth trends for most of the countries, MercoPress reported.

"The worst of the crisis has been left behind. The motors of growth have already been restarted, but we still don't know how much will fuel last," said Barcena, adding a cautionary note that continuing and sustained recovery still depends on trends in global markets.

Criticized shortly afterward for announcing his arms purchases, Peruvian President Alan Garcia defended his government's decision, saying the new tanks and aircraft would replace obsolete equipment.

"This does not contradict our commitment to stop an arms race in the region," Garcia said, pointing out that Peru last purchased Russian T-55 tanks in the 1960s. "They needed upgrading, and it was decided to decommission them," he said.

He said the purchase of new Chinese tanks would compensate for the absence of the Russian tanks and act as a deterrent "because we want Peru to be defended."

The delivery of Chinese armor to Peru will ensure a long-term collaboration between the Peruvian and Chinese military establishments, analysts said.

Five Chinese-built MBT-2000s took part in a recent military parade in Lima but neither government has revealed the final numbers bought under the deal. The MBT-2000 is a battle tank jointly developed since the late 1980s by China and Pakistan. China has sold the tank to various armed forces around the world.

Garcia said, "Buying Chinese tanks was the right decision: They have an attractive price for Peru and modern technology. Thanks to President Hu Jintao we've managed a significant drop not in the price but in the downpayment and installments," he added.

Peru's other purchase, Super Toucan planes from Brazil's Embraer company, will be deployed to help fight cocaine trafficking through Peruvian parts of the Andean and Amazon regions. Remarkably, though, that deal has a Chinese twist, too.

Embraer Thursday signed a wide-ranging deal with China that will give the Brazilian aircraft manufacturer access to $2.2 billion to fund the manufacture and sale of regional jets in Asia.

The loan from China's CDB Leasing Co., a unit of state-owned China Development Bank, will provide funding to airlines in China and Asia. China may also buy jets directly from Embraer, Brazilian officials said.

Topics: Alan Garcia
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