[NYTr] Chile's Aggressive Military Purchases Ruffle the Region

[All the News That Doesn't Fit]

Council on Hemispheric Affairs - Aug 7, 2007
http://www.coha.org/2007/08/07/chile%e2%80%99s-aggressive-military-arm-purchases-is-ruffling-the-region-alarming-in-particular-bolivia-peru-and-argentina/

Chile’s Aggressive Military Arm Purchases Are Ruffling the Region, 
Alarming in Particular Bolivia, Peru and Argentina

• Is the Chilean military preparing for a new computer game: 
War of the Pacific: Part II?

• Bachelet administration unwilling, or organically incapable of
restraining unnecessary transactions 

• Chile’s neighbors turn to emphasizing social and economic reform as
they face looming shortfalls and severe social unrest; meanwhile,
Chile’s near autonomous armed forces go on weapons shopping spree 

• In recent years, Chile’s military has purchased jets, ships and
tanks, but for what aim?

by COHA Research Fellow Alex Sanchez 

Despite the fact that Chile has not engaged in a conflict with another
state since the War of the Pacific in the late nineteenth century, the
Chilean military has been carrying out aggressive weapons purchases in
recent years. Long known for having an almost semi-autonomous military
force, Chile, in recent years, has spent hundreds of millions of
dollars to upgrade its armed forces, transforming them into the most
consequential military establishment in the subcontinent.

>From a practical point of view, the country is not facing any
conceivable external military threat. The wide range of military
purchases over the past few years demonstrates that the previous
Socialist-led administrations of Ricardo Lagos as well as the current
one of President Michelle Bachelet, for all their leftist rhetoric, are
reluctant to confront the country’s powerful military establishment
over how it should spend its budget, and would far rather appease it.
This customary appeasement only makes Chile’s military aggressive and
demanding, if not belligerent, as it faces its neighbors, but it also
illuminates the inherent timorous nature of civilian rule in Santiago,
vis-à-vis its voracious uniform services.

Charge It To This Copper Credit Card

Since around 2000, the Chilean military has gone on a buying spree,
spending $2.8 billion for weapons, ostensibly to modernize its old and
obsolete equipment. The purchases, which have led to expressions of
alarm in neighboring Argentina, Peru and Bolivia, include 10 Lockheed
Martin F-16 fighter planes acquired from the United States, 18
second-hand similar warplanes from the Netherlands, frigates, two
submarines and 118 Leopard IIA4 tanks from Germany.

On January 31, 2006, it was reported that Chile had originally
announced its intent regarding the F-16s in 2002 upon the conclusion of
the 20-year ban on the U.S. export of high-tech weaponry to Latin
America. The F-16s are not equipped with advanced air-to-air missiles
in keeping with a U.S. policy against introducing new military
technology to the region. Authorities did not say the type and
manufacturer of the missiles the planes will eventually carry. Also,
there have been rumors that Chile (in addition to the Philippines,
Mexico and Paraguay), has shown interest in purchasing F-5E warplanes
from Taiwan.

Regarding its navy, Chile has purchased eight frigates from Holland and
Britain (four from each). On August 1st, there was a ceremony in
Valparaiso where the Chilean navy officially took command of the former
Dutch frigate now under the name of Almirante Riveros. In attendance at
the ceremony were important dignitaries such as Chilean Defense
Minister Jose Goñi Carrasco, the Commander of the Chilean Navy Admiral
Rodolfo Codina Diaz and the Commander of the Royal Dutch Navy,
Vice-Admiral Jan Willem Kelder. The three remaining Dutch-purchased,
and now being refurbished, frigates are the Blanco Encalada, Almirante
Latorre and Capitán Prat. According to reports, the Almirante Riveros,
under Captain Ronald McIntyre Astorga, rumored to make 30 knots, is
fueled by a mix of gas and diesel and is equipped with
surface-to-surface Harpoon missiles and surface-to-air Sea Sparrows.
The Chilean navy also purchased frigates from the British Royal Navy,
the first of which- the former HMS Sheffield- has now been renamed
Admiral Williams. Santiago is waiting for the delivery of three others,
the future Cochrane, Lynch and Condell. In addition, it is expecting
the delivery of two new Scorpene submarines built by a Spanish-French
consortium.

In addition, Santiago announced its intentions to buy 118 German-made
Leopard tanks. Former Defense Minister Jaime Ravinet said that the
Chilean armed forces would soon be replacing “old units dating from the
Korean War years.” The ministry did not disclose the total value of the
tank purchase, but the conservative Santiago newspaper El Mercurio
reported the price at $100 million. After the new tanks arrive, the
Chilean army will have a total of some 300 tanks, according to the
newspaper. Finally, the Chilean army has purchased around 100 Humvee
jeeps, which will be used for reconnaissance, utility and scouting
functions.

Navy commander Admiral Rodolfo Codina said the frigates were necessary
because the navy’s old units “were obsolete and had logistical problems
due to the lack of spare parts because of a very old technology.” On
June 29, the Commander-in-Chief of the Chilean Army, General Óscar
Izurieta, left for Germany to oversee the transfer of the Leopards.
Chilean authorities insist that the newly purchased warplanes, tanks,
frigates and submarines were merely replacements for obsolete material,
and should not be seen as representing any kind of military challenge.

There’s Nothing Like Copper

Due to the famous Copper Law (Ley del Cobre Reservado) implemented in
1958 and later amended during the era of military rule under Augusto
Pinochet, the armed forces are automatically granted a fixed ten
percent of the nation’s export earnings from the state-owned (and the
nation’s largest) copper company, the Corporación Nacional del Cobre de
Chile (CODELCO). CODELCO is the world’s largest copper producer, with
an annual output of around 1.8 million metric tons (two million tons).
As a result of the recent spectacular rise in copper prices, these
earnings now have been translated into a huge amount of buying power
for the Chilean armed forces.

The Copper Law statute has been on the books for decades, but it was
revised during the Pinochet dictatorship and has not been amended since
civilian rule was restored in 1990. A January 7, 2007, article in The
New York Times explained that “record prices for copper, Chile’s main
export, have given the government a multibillion-dollar windfall, but
it also has produced for Chile’s economy unexpected side effects and
has set off a sharp political debate about how to use the money.” The
article notes that driven largely by China’s seemingly insatiable
demand for metals of all kinds, the price of copper quadrupled from
2003 through 2006, reaching record levels at midyear before falling to
just under $3 a pound at year’s end. That increase has helped Chile
build its foreign reserves and buttress its budget surplus, which in
turn, have been key factors in the peso’s rise in value against the
dollar. The daily average copper price for the first half of 2007 was
about US$3.06 per pound on the London Metal Exchange, 11.5 percent
higher than the corresponding figure in 2006. Copper mining accounts
for roughly 7 percent of Chile’s total GDP, and in 2006 copper
represented 57 percent of the country’s total exports and 32 percent of
its total fiscal revenues. According to a June 1 briefing in Global
Insights, data from the Chilean Budget Office (DIPRES) reveals that the
Chilean central government achieved a 3.56-trillion-pesos
(US$6.63-billion) overall surplus during January-April 2007. Copper
mining continues to drive the expansion in fiscal revenue: mining taxes
and copper earnings from the operation of state-owned CODELCO accounted
for 27.5 percent of total fiscal income for the period. The latter
alone reached 7.88 trillion pesos (up by 20.7 percent year-on-year in
real terms).

The issue at hand is that, regardless of how much CODELCO produces and
how high the price of copper rises on the international market, the law
requires ten percent of the total value of CODELCO’s revenue must be
reverted to Chile’s armed forces. As a consequence, not only is CODELCO
deprived of funds needed to fully expand its production, but also
President Bachelet’s ambitious social programs risk going
underfinanced. A further and more serious result is La Moneda’s
controversial purchase of combat aircraft, tanks, missiles, frigates
and submarines for seemingly no rational strategic defense purpose.
This has contributed to creating growing tensions in the region, and
has forced countries that should be devoting the bulk of their
resources to the internal development, to instead embark on a costly
arms race.

Chile: Streets Filled With Copper

Santiago also has embarked on a program to expand some of the country’s
producing copper mines, which would have the eventual effect of
increasing national revenues. For example, copper production at Chile’s
Collahuasi mine will more than double by 2014, in order to produce over
one million additional tons of the red metal per year. This will make
the facility into the world’s second-largest copper mine. According to
a Reuters filing, in the first phase of the expansion at Collahuasi,
which is located in copper-rich northern Chile, the mine will boost the
capacity of its concentrator to 170,000 tons per day from its current
production of 130,000 tons per day. Collahuasi is located in the heart
of Chilean copper country, high in the mountains, and in what is
considered one of the world’s driest regions.

The vitality of Chile’s extant copper law demonstrates that the
country, almost two decades after the end of the Pinochet regime, is
served by a nearly autonomous military, which is largely exempt from
legislative oversight, leaving Chile more a guided democracy than a
wholly free democratic society. The high command of the armed forces
essentially has been granted a blank check to carry out whatever
impulse military purchases they desire, with the Bachelet
administration has proving incapable, or unwilling, to take a firm
stand against the status quo. The fact that the military still receives
ten percent of copper revenue is an example of an antediluvian
tradition which does not legitimately belong to the purviews of a
constitutional society under civilian rule, especially when reflecting
upon how such funds could be so beneficently earmarked for a range of
social justice projects.

Between the Soldiers and the People

Bachelet’s election, in the minds of many Chileans, was a vote for
change. However, some of the Pinochet-era’s “way of doing things” has
not been substantially changed, including tolerating an essentially
autonomous military characterized more by arrogance than by deferring
to any civilian-lead chain of command. The military exists as almost a
separate entity, outside of government control, with its own guaranteed
permanent source of income in the form of a fixed percentage of copper
revenues. In June 2006 there were massive protests in the country by
university students over the deep flaws in the country’s educational
system. According to a June 8, 2006 article in the Los Angeles Times,
there were banners at the protest which proclaimed: “prices for copper
go through the roof, education falls through the floor.” This
manifestation captured the anger of students enduring what they called
second-rate schooling, while an export-driven economic boom had
methodically equipped the military with barrel full of cash. The
article further divulged that while Chile does not suffer the 50
percent-plus poverty rates and political instability of neighboring
Peru and Bolivia, the billions of dollars in surpluses it reaps from
mining revenue have not yet been translated into significant
improvements of the public education system, which is in urgent need of
a dramatic overhaul.

Most recently there have been protests by CODELCO workers against the
mine’s management. The strike lasted a total of 36 days, sporadically
halting production at three of the company’s five units. CODELCO
officials placed the losses attributed to the strike at more than $90
million, as a result of stalled production and damage to company
property caused by erratic violence at the hands of the workers.
According to the mine’s management, perhaps a self serving explanation
of what went awry, one reason behind these protests is the presence of
Chile’s Communist Party (Partido Comunista) within the local trade
union’s leadership, which, according to this claim, has been stirring
up the workers. It has been reported that the Confederación de
Trabajadores del Cobre (Copper’s Worker’s Confederation - CTC), which
was created in early June, is certainly marked by the presence of
Communist Party activities. The flimsy linkage behind these charges is
that Cristian Cuervas, an official of the country’s Communist Party, is
also president of the CTC, as are some other high ranking officials of
the union.

Parallel to these issues, on July 1, the army’s Commander-in-Chief,
General Óscar Izurieta, warned that the armed forces must be apolitical
for the sake of Chile’s internal stability. In an interview with El
Mercurio, General Izurieta maintained that, “living in peace is a
tremendous effort for the army.” He added that his job is complicated
by “themes that take me away from my role and that oblige me
practically to enter the political arena.” Regardless of the obvious
ominous innuendos behind Uzurieta’s words and the Chilean military’s
well established brutal reputation and supercilious attitudes that do
not well serve democracy’s cause, one must wonder how many
non-publicized meetings have taken place among the Chilean military’s
high command, Bachelet, or her representatives, and CODELCO’s
management. Without a fully-thriving copper industry, not impaired by
chronic work stoppages, the military would not have the huge budget at
its disposal to annually spend on new hardware that may be far from
being necessary for the nation’s survival.

Who Art Thine Enemies?

As a Peruvian intelligence officer explained in a COHA interview, “the
Chilean military has the money and the influence, so they will buy
whatever weapons they want, even if they do not really need them.” Peru
and Bolivia already have smaller, far less-equipped air forces than
Chile. Moreover, tensions still persist as a result of the bitter
legacy of the 19th century War of the Pacific, which made Bolivia into
a landlocked country by stripping it of its coastline. Peru and Chile
vehemently disagree over their territorial and maritime border, while
many Peruvians and Bolivians still hold a grudge over the immense
amount of Bolivian territory lost to Chile during that war.

Peru’s Foreign Minister Jose Garcia Belaunde has acknowledged that Peru
is concerned about Chile buying sophisticated U.S. F-16 warplanes,
stating “the purchase of this fleet affects the region’s strategic and
military balance.” He added that two F-16s are based in the Chilean
military establishment at Iquique, near the Peruvian border.
Furthermore, the Peruvian military has made only minor, military
purchases in recent years. During the Alejandro Toledo administration,
Lima purchased 2 Lupo-class frigates from Italy. Most recently, under
the Alan Garcia presidency, plans have been formulated, according to
the daily La Republica, to upgrade the air force’s fleet of 12
Mirage-2000 fighter jets. However, as significant as these purchases
and upgrades may be, they fall woefully short when compared to Chile’s
high-flying arms acquisitions. In addition, Peru today faces the
possible revival of the terrorist Shining Path movement, which could
mean that Lima might have to focus on internal security (i.e. creating
a counterinsurgency strategy), rather than concentrating on external
threats (i.e. Chile) in the immediate future.

Bolivia as a Threat?

Meanwhile, under the rule of Evo Morales, Bolivia let it be known last
year that it would begin building military outposts along its borders,
prompting a perturbed reaction from Bolivia’s traditionally uneasy
neighbors, Chile and Paraguay. A military border outpost is also said
to be in La Paz’s plans for the Chile-Bolivia border. La Paz and
Santiago still do not have normal diplomatic relations (harking back to
the War of the Pacific) as Bolivia continues to vocalize its demands
for access to the sea through Chilean (former Bolivian) territory.
However, in spite of the historical demands and the proposed border
garrisons, it is surreal to believe that Bolivia, unless in alliance
with other area countries, can pose anything like a major military
threat to Chile.

A military base, or outpost, may be a good place to organize and train
troops, however the Bolivian military still lacks the hardware (like
tanks or artillery pieces) to pose a significant challenge to Chile.
Moreover, because it is a landlocked country, should the Bolivian
military wish to make significant upgrades by buying additional
hardware, this equipment would logically have to be transported through
Peruvian territory one way or another, as Lima remains La Paz’
historical ally. Transportation through another country would make it
obvious what Bolivia is doing and why. Therefore, Bolivia’s proposed
military outposts along the Chilean border could best be regarded as
Morales exhibiting either “bark or bite,” but Chile would be sure to
get the message. Morales would want to show his people that he is not
afraid of Chile, but that he will not go as far as openly threatening
his increasingly formidable neighbor to the west.

The Argentine Prong

Another neighboy of Chile is Argentina, whose military, to put it
mildly, has had major equipment problems of its own. In March 2006, the
Argentine Air Force lost a Lear Jet with its six-man crew, which had
been deployed on a humanitarian mission to Bolivia. This year, on April
11, its icebreaker, Almirante Irízar, caught fire in South Atlantic
waters off Patagonia (apparently due to a malfunctioning generator),
forcing the crew to abandon ship and resulting in the additional loss
of two Sea King helicopters. On May 1, a Mirage M3 fell out of the sky
during an air display, killing the pilot. After the last accident,
Argentine Defense Minister Nilda Garré (who is, ironically, now under
investigation for possible tax evasion resulting from government
military purchases) revealed that following the 2006 crash in Bolivia,
she had ordered an audit on the operational safety of the aircraft in
the inventories of all three armed services. One immediate result was
the allocation of additional budgetary funds to renovate the fleet of
13 Hercules transporters, of which only three were considered to be
“relatively available.” Garré said, “we have very old aerial material,
as a result of more than 20 years of disinvestment in the sector and a
50 percent budget reduction in that period.” On May 18, she announced
that Argentina had taken up a U.S. offer of four Sea King helicopters
(two of them to replace those lost in the Almirante Irízar fire), and
that more funds would be made available to the navy to increase the
number of hours its assets can spend at sea, and to locally develop a
light utility vehicle for use by the Argentine marine corps. Officials
said that the government was also looking at the possibility of buying
Chinese helicopters for army use.

In recent years, the Argentine armed forces have not engaged in any
major military purchases, perhaps as a consequence of its repugnant
reputation derived after a decade of brutal military rule during the
1970s and 1980s. Even though its armed forces seem to be fairly quiet
these days after killing almost 30,000 innocent civilians during the
aforementioned period, there is still a traditional animosity for the
Chilean military by their Argentine counterparts, which should not be
discounted. During the Falkland War in 1982, the Pinochet regime gave
vital intelligence information to British forces, which aided the U.K.
in defeating the Argentine military. Such an “afrenta” has certainly
not been forgotten by the Argentines; Chile’s current flea-market
weapons procurement extravaganza can only continue to exacerbate
ancient animosities among the military high command in Buenos Aires.

Chile’s Militarized Democracy

Chile’s current military expenditures have very little to do with the
simplistic apologia that this is only about the “replacement of ancient
equipment,” and that it has much more to do with strengthening the ego
of the Chilean military high command and allowing it to cast a longer
shadow, both regionally and within the internal power structure of
Chilean society. The country’s armed forces, due to high copper
revenues, have wealth to waste, and are in a rush to purchase more
tanks and fighter planes, instead of investing their surplus funds in
better nutrition and equipment for rank-and-file troops, let alone
trying to improve the standard of living of the poor.

Contrary to what its military senior command may want to believe, Chile
today faces no external military threats (even though it is also
necessary to say that it has few friends in the area, that feel that it
is worthy of anything more than a cold handshake). If anything, its own
military has become the country’s most problematic foe, expending
scarce resources in order to buy weapons of destruction, instead of
focusing on badly needed social and educational programs. These
purchases demonstrate that, ultimately, the military remains largely an
autonomous entity in Chile, a separate entity from Bachelet’s civilian
government and not operating under any predictable bona fides. The
Chilean military has, largely on it own, engaged in a one-sided arms
race in the Andean sub-continent, with the nation’s civilian government
lacking the political will or strategic interests to put an end to the
hypertrophy of vital institutions that stems from the Pinochet
dictatorship’s ghastly legacy and Santiago’s tolerance of such a skewed
definition of democracy.